Investment Bank Rah-Rahs India's Economy

18 October 2007

NEW DELHI: In a ten-year forecast for the Indian economy, New York-headquartered investment bank Lehman Brothers is in bull mode, predicting annual national growth of ten per cent or more over the upcoming decade.

But at the current tipping-point in the global economy, cautious observers are wary of partisan parties (such as Lehman) hyping ongoing growth, even in tiger economies like India - for they too are at risk from the fragility of developed markets.

Lehman rah-rahs it for an unrestricted free market, its growth forecast predicated on India's continued structural reforms: the liberalisation of investment rules, deregulation of labour markets and cutbacks in government spending.

If the nation opts for the Friedman line in preference to Chomsky's, Lehman opines that the Indian stock market (pictured above) should perform well over the medium-to-long term.

"Investors can expect returns between 12%-20% from the stock markets over the next five years," prophesies the bank.

India's economy has grown an annual average of 8.6% in the last four years, and Lehman projects it will grow at 8.8% in 2007-08 and 9.2% in 2009.

But, warns the report: "Pushing through structural reforms will remain a political challenge in the face of headwinds from vested interest and coalition politics."

Data sourced from The Times of India; additional content by WARC staff