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ECONOMY & BUSINESS
THE world did not end in 2012 as the Mayans had supposedly predicted but apocalypse or not, the global economy went through a tortuous period of pain and adjustment. India too, had an anaemic year of progress with GDP growth rate plummeting to around 5.5 per cent levels and estimates are that this financial year will be the slowest pace of growth in a decade. The year gone by can be divided into two clear phases for the economy and policy. From January to August was a period when an embattled UPA government was in a policy paralysis mode due to several factors. The turning point was the entry of P. Chidambaram in North Block as Finance Minister. This was just after global ratings agency, Standard & Poor's had warned India of a possible downgrade to junk status. It was an alarm bell and the UPA government figured that they were getting flak for inaction so might as well do something bold and change the narrative. Thereafter, the government has embarked on the most ambitious reforms course in the three years of being in power, albeit late, staring down at its political opponents. The most contentious of its reform moves in recent moves, allowing FDI in multi-brand retail has got Parliament's approval. . The flurry of reforms include attacking the subsidy burden by raising diesel prices and capping LPG cylinders at six a year, raising FDI in aviation, pension and insurance, reworking of GAAR, a fiscal consolidation roadmap, disinvestment of PSUs, package for state electricity boards has been announced. While real problems in the economy like weak industrial production, fall in exports, high inflation, high interest rates, weak growth, low investments persist the government has shown its intent with all these measures which has perked up sentiment reflected in the strength of the rupee and rising stock markets. The Banking Bill has been passed o allow new private banks and a Cabinet Committee on Investment (CCI) formed to fast track big ticket projects. UPA-II's joker in the pack is the Aadhar based direct cash transfer (DCT) to transfer government benefits directly into bank accounts which will the government's calling card for 2014 general elections. Indian household budgets have borne the brunt of the double whammy of stagnant incomes, lesser jobs and rising expenses. While realty markets have been subdued, gold has seen life time highs not so much because of demand but because of the monetary easing in the US which led to more liquidity. The corporate sector had a listless year. Spooked by ever new scams and allegations of crony capitalism (2G, coal) and slow government decision making, India Inc is wary of investing here. Ratan Tata will make way for Cyrus Mistry as the chairman of Tata group by December end marking the end of the one of the reign of the one of the most influential corporate leader in recent times who has expanded the Tata empire to a $ 83 billion entity with a truly global footprint. The horror in Manesar was a low point as following a manager's murder by workers, , Maruti's plant had to be locked down for a month. Vijay Mallya's run of good times is almost over with Kingfisher Airlines grounded and sale of equity in United Spirits to Diageo. The unprecedented and scariest event of the year was the power collapse due to grid tripping across north and eastern India, the biggest blackout in human history with over 60 crore people affected. From traffic signals to TV sets to computers to water supply to trains, everything was down for almost three days. People did recall the Mayan prophecy during those 72 hours.
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