Indian economy progresses despite financial, political woes

India has achieved significant success in developing its economy and improving its people's welfare in recent years despite the international financial crisis and frequent political challenges.Though its economic growth decelerated in the past two years, India still maintains a relatively high gross domestic product (GDP) growth rate, next only to China and Indonesia in 2012.Boosted by robust economic development in the past few years, the Indian government has spent much in improving people's welfare, including granting large subsidies to the poor.India also has updated its infrastructure in many aspects.In the past few years, India's aviation industry has advanced, with two of its airports chosen as the world's best by the International Air Transport Association. India's rail transport has also been updated with better trains and facilities.The progress came in defiance of various challenges, including political paralysis and corruption.The Congress party-led United Progressive Alliance (UPA) government has met many challenges from the main opposition party, the Bharatiya Janata Party, a primary force against foreign direct investment (FDI) reform.In the past four years, several central government ministers have resigned or been arrested due to corruption. Grassroots activists have even launched protests against corruption in New Delhi.As the international economic environment continues to deteriorate, a serious trade deficit, falling business confidence and the continuously depreciating rupee have directly pulled down India's growth.As a large emerging economy, which boasted an average growth rate of 8 to 9 percent before 2011, India is expected to post a further slowdown in 2012 after achieving an annual growth of 6.5 percent in 2011.Despite the negative scenario, economic reforms allowing the entry of FDI into the retail business raise hopes of reviving the nation's economy.The economic reforms were strongly opposed by the Indian People's Party and the Trinamool Congress party, which argued that the opening-up would severely damage the interests of farmers and small- and medium-sized enterprises.But the FDI bill on retail was finally approved in the parliament in December, paving the way for the entry of more foreign investment into the country and improving India's image worldwide.Although this particular measure encountered strong opposition from local retailers and opposition parties, economic analysts said that the law would greatly improve India's economic structure and competitiveness in the world market.Given this backdrop, international rating agencies and some financial institutions predict that the Indian economy may have re-entered the fast lane and regained lost ground.In 2013, India faces some hurdles, most of which are external in nature. Uncertainties in India's main trading partners, such as the United States and Europe, would bring about weak demand for Indian exports and invariably affect the country's economic growth.Observers pin their hopes on China, one of India's top trading partners, which could give an upbeat picture for India if it keeps its economy brisk.In 2013, the performance of the Indian economy will largely depend on the level of interest rates and the implementation of economic reforms, analysts say.The Indian economy is expected to bottom out and rebound from the last quarter of 2012. In the medium and long term, the Indian economy can seize new growth points and continue to improve, analysts say.