indian economy - end of downturn?

I was occasionally following world economic forum summit India which is underway in New Delhi. During this event newspapers , economy focused TV channels were full of top ranking economists, business leaders and politicians.

When economic woes started up last year, politicos and others at first went on a denial mode saying that it won't effect India. Then they went overboard with so called stimulus where instead of spending the money on sectors like building infrastructure, & on subsidizing sectors adversely effected (like textiles, diamonds), money was spent on things like loan write off and other populist programs.

At that time, I made couple of points in my blog:

- I mentioned that lack of money in most cases was not the issue, implementation (things such as infrastructure) was the issue.

- Though the banks had sufficient funds they were unwilling to lend to people with dubious credit record, & people were not making big purchases due to prevailing economic uncertainty.

I also mentioned that economic recovery is going to take much longer than 6 months to 1 year estimated / claimed by several experts.

From discussions now it is clear that recovery is going to take at least 2 years to reach 9% levels prevailing earlier, with this year economy clocking 6.5-7%.

In view of the fact that infrastructure development has still not taken off , export sector still not performing, agriculture not performing well, I think it is still unlikely.

According to some reports, even the spurt seen in purchase of automobiles is to some extent contributed by the money getting diverted from loan write off to buying automobiles/ bikes etc.

Now, first part of what I have said is pretty much what most of the participants are saying now.

Another funny thing is that inflation is supposed to be negative, any lay person will know that this is not true with price of house hold items going through the roof. This is due to wrong items being measured and unreliable data.

But,yesterday I saw even a top economist saying that inflation was negative until recently!!

stimulus package.. continued

While some commentators have been saying that economies of India and China will (hopefully should) be the beacons which would pull the shrinking world economies out of the present doldrums.
Though the Indian economy is expected to clock 7% growth, I am inclined to be more skeptical.
Consider these:

++ Reserve bank of India (RBI) has been easing up on liquidity with the result banks and other financial institutions have plenty of cash. But,they would not like to lend to people with dubious credit rating and most of the people who have income to make large purchases are not inclined to borrow in view of prevailing uncertainty.
++ Also, banks are insisting on much higher percentage contribution from borrowers to prevent them from simply returning the property when the prices decline which seem to be the case in many projects.
++ Most of the real estate projects were for higher end properties which have very few takers now a days. Many of the companies are scrambling to reconfigure so that medium/low income people could buy them- but this will take some time to fruity.
++ Inflation reached record low - in a developing economy like India it is alarming in my view if sinks further.It indicates that people are not buying / spending money rather they are saving money and also there is decline in demand.
++ Most of the infrastructural projects are proceeding at snail's pace
++ Finally, UPA regime has been on a spending binge without utilizing the money for creating productuve assets. This is also pushing the deficit to record levels.

Please comment......