The effects of the global economic downturn of 2008 persist. The developing countries, which appeared in 2009-10 to have recovered from the global crisis, slumped in 2011-12 and have stayed there. India’s GDP growth fell to 6.7 per cent in 2011-12, 4.5 per cent in 2012-13, and a projected 4.9 per cent in 2013-14 (the final figure is likely to be lower). The growth rate of industrial production fell to 2.7 per cent in 2011-12, 1.2 per cent in 2012-13, and 0.3 per cent in the first half of 2013-14. The services sector, which has been driving India’s GDP growth, slowed in the second quarter of the current financial year to its lowest level in 12 years.
The downturn is also reflected in the slowing of corporate profits. The ratio of net profits to sales has roughly halved from the boom days.[1]There is a serious corporate debt problem, with the impaired assets ratio for industry rising from 10.2 per cent in 2009 to 16 per cent in 2013.[2]