INDIA CONTINUES SLOW PACE OF ECONOMIC GROWTH

[Mr. Modi, who took office as prime minister on Monday, is faced with an economy straddled with stubborn inflation, weak domestic demand, a considerable fiscal deficit, elevated borrowing rates and depleted industrial output. Adding to the worries about rising prices is a possible agricultural crisis in the form of a weak monsoon, ifIndia’s meteorological department’s forecast bears out.]

Top of Form

Bottom of Form

By Neha Thirani Bagri 

Rupak De Chowdhuri/Reuters

Laborers move a concrete mixer on a construction site of residential buildings in Kolkata

 in March. Investors are hoping the new central government will enact changes that will 

encourage more construction and large-scale projects.

MUMBAI — India’s economy grew 4.6 percent in the three months ended in March, the last full quarter under the Congress party-led administration, demonstrating the challenges ahead for the newly elected government under Narendra Modi of the Bharatiya Janata Party.

The gross domestic product figure, released by the government Friday and showing growth from the same period last year, was below the 4.7 percent rise in the quarter that ended in December. Analysts polled by Reuters had forecast 4.8 percent growth for the most recent quarter. 

For India’s full fiscal year ended in March, the economy expanded 4.7 percent, the second straight year of growth under 5 percent. The relatively slow expansion, close to the decade-low 4.5 percent seen in the previous fiscal year, shows a significant fall from the 8.4 percent growth in the 2010-11 fiscal year.

The Congress-led administration that governed India for the past 10 years saw a dramatic turn of fortunes during its tenure, set off by a global financial crisis, slowing domestic demand, political paralysis in Parliament and plummeting investor confidence.

While the sweeping electoral victory by Mr. Modi and his party has led to a marked improvement in business confidence, economists caution that it will take some time for the euphoria to translate to real growth.

Mr. Modi, who took office as prime minister on Monday, is faced with an economy straddled with stubborn inflation, weak domestic demand, a considerable fiscal deficit, elevated borrowing rates and depleted industrial output. Adding to the worries about rising prices is a possible agricultural crisis in the form of a weak monsoon, ifIndia’s meteorological department’s forecast bears out.

Mr. Modi’s reputation of being friendly to businesses and expediting large-scale infrastructure projects during his 12 years as the chief minister of Gujarat has fueled expectations of a quick recovery for the sputtering Indian economy. Mr. Modi is expected to streamline tax and investment rules after a decade of policy paralysis, and hopefully incite an investment-led recovery.

The sweeping victory of the B.J.P. in the parliamentary elections has led the Indian stock markets to rally to record highs, and the rupee hit an 11-month high against the dollar after falling sharply last year.

Mr. Modi’s decision to appoint Arun Jaitley as finance minister, a prominent corporate lawyer who was commerce minister in a previous B.J.P.-led administration, was viewed favorably by the markets.

“At a juncture when India needs to send a very positive signal to global investors that foreign investment is welcome in all sectors, there couldn’t have been a better choice as a global ambassador for Indian investments than Mr. Jaitley,” said Ajay Bodke, the head of investment strategy and advisory at Prabhudas Lilladher, a brokerage firm in Mumbai. “He is seen as extremely pro-reform, pro-investment and as someone who will bring back core efficiency in the public sector.”

However, many economists argue that the euphoria ignores the systemic issues that plague the Indian economy and that expectations of an immediate recovery are unrealistic.

“Expectations and sentiment can change immediately, but the actual growth rate depends on things on the ground,” said Surendra Laxminarayan Rao, economist and former director general of the National Council of Applied Economic Research. “You have to have investment reviving, construction starting, employment being created, government departments have to be made to function and bureaucrats have to be made responsible. That means a lot of systemic change, and that won’t happen in a hurry.”

Large-scale infrastructure and investment projects that were stalled because of the bureaucratic bottlenecks have been a major cause of India’s stagnation. While the central government is likely to be more active in clearing projects under Mr. Modi, economists say that under India’s federal system, much of the power to expedite projects lies with the state governments.

“Most large investment projects are stalled at the state level because of issues like land acquisition and environmental clearances,” said Miguel Chanco, an economist who covers Asia at Capital Economics in Singapore. “On top of having to clear them at the national level, Mr. Modi will have to coordinate across various state governments in order for these projects to come into fruition.”

Mr. Chanco predicted that India would grow at a 5 percent pace for the 2014 calendar year, and that growth would likely not pick up until the second half of this year.

Economists are now looking toward the announcement of the B.J.P. administration’s first budget, which should come out in July, to see whether the government will fulfill its campaign promises and reinvigorate the investment cycle, improve the fiscal deficit, bolster infrastructure spending and simplify India’s unwieldy tax regime.

Mr. Rao predicted that if the government is able to enact a substantial increase in infrastructure expenditure, open up foreign investment in defense and infrastructure and cut the fiscal deficit, then 6 percent growth could be achieved by the third quarter of this year.

@ The New York times

*

RAPES IN INDIA FUEL CHARGES OF CONSPIRACY BY A CASTE

[The father, a 45-year-old agricultural laborer from a low-ranking caste, said in a telephone interview that the two girls were last seen alive on Tuesday evening in a mango orchard, in the company of a man named Pappu Yadav. (The man’s surname is the same as his caste.)]

By Gardiner Harris and Hari Kumar

NEW DELHI — The rape and murder of two teenage girls in an Indian village threatened to touch off wider strife on Thursday, when the father of one of the girls said the crime was the product of a conspiracy among Yadavs, members of the dominant caste in the area.

The two girls, cousins ages 15 and 14, were found dead on Wednesday, their bodies hanging from mango trees in Katra Shadat Ganj, a village in the Budaun district of Uttar Pradesh State. An autopsy confirmed they had been raped and strangled, the chief of the district police said.

Uttar Pradesh, like much of India, is deeply split along religious and caste lines and has been prone to mob violence, often in reaction to sensational or violent crimes by one group against another. Against that backdrop, the father’s accusations of a caste-based conspiracy are potentially explosive.

Making matters worse, two police officers are accused of involvement in the crime.

Under Indian law, neither the girls nor the father may be named in news reports.

The father, a 45-year-old agricultural laborer from a low-ranking caste, said in a telephone interview that the two girls were last seen alive on Tuesday evening in a mango orchard, in the company of a man named Pappu Yadav. (The man’s surname is the same as his caste.)

The father said a relative saw the girls with Mr. Yadav and two of Mr. Yadav’s brothers and that, for reasons he did not explain, the relative tried to intervene between Mr. Yadav and the girls.

One of the Yadav brothers pulled out a pistol “and put it to the head of my cousin-brother,” the father said, using a common term in India for a close relative. “He got scared and ran away.”

When he heard what had happened, the father said, he went to the local police station and asked that Mr. Yadav’s house be searched.

But the police officers, who are members of the Yadav caste, “took the side of the culprits,” the father said. “They abused and misbehaved with us.”

The next morning, when the two girls were found dead, a crowd of angry villagers gathered at the scene, accusing the police of complicity in the crime and blocking them from taking away the bodies. Calm was not restored until the early evening, after the police agreed to arrest the Yadav brothers and two police officers.

Udai Raj Singh, the chief government official in the district, said four suspects had been arrested, including one of the officers; the other officer “is absconding,” Mr. Singh said.

Another politician in the village, Kamal Kant Tiwari, said that Mr. Yadav’s family was new to the area and that few residents knew what to make of the allegations.

“We know that some scuffle took place with those boys and the uncle of the girls,” he said of the encounter Tuesday evening. “What happened after that is not very clear.”

Charges of rape leveled by a low-caste father can have deep resonance here, as for centuries upper-caste Hindus could attack, rape or even murder those in low castes with impunity.

Known victims of rape are often ostracized by their families and villages, so for years many rapes were kept quiet and never reported.

That has changed somewhat over the past 18 months, after an especially vicious gang rape in New Delhi in December 2012 prompted a nationwide campaign to persuade women who have been assaulted to go to the police.

@ The New York times