India's economic miracle losing its lustre

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NEW DELHI, Mar 10 (AFP): Booming India is reeling from a flurry of bad financial headlines, suggesting the outlook for the world's second fastest-growing major economy is not as rosy as it was, analysts say.
Economic growth is losing pace and inflation is on the rise, meaning India's central bank-which has hiked interest rates nine times since 2004 to tame prices-has little room to loosen monetary policy to spur activity, they say.
"The picture of very strong growth and low inflation in India is starting to give way to one of slowing growth and rising inflation," said Robert Prior-Wandesforde, an economist at HSBC in Singapore.
Last Friday, inflation in Asia's third-largest economy hit a nearly 10-month high of 5.02 per cent, pushing through the central bank's ceiling of five per cent for this fiscal year.
Adding to the gloom has been a 25 per cent slide since January 10 in India's benchmark Sensex share index-whose 47 per cent jump last year made it one of the world's top performers -- as foreign investors have bailed out.
"With the (global) economic turbulence, you're seeing a lot of risk aversion," said Amitabh Chakraborty, equities president of Mumbai's Religare Securities.
Also, the Congress-led government, which faces general elections in little over a year, is storing up fiscal trouble with its 15-billion-dollar loan bailout for farmers, big civil service pay hikes and tax cuts announced late last month in its populist, poll-geared budget, economists say.