The ascendency of India as an economic world power

Indian economy has got a huge boom in the last decade. India is now, for sure, a rising economic power in Asia. Their technological improvement and cheap labor have been the main attraction in the recent years. So, the foreign direct investment in the country has been increased with a great extent in last decade. India’s current GDP growth is now 8.5 % which the Indian government and other specialist want to see over 9% by the next year. However, recently it has seen that due to the increasing rate of the central bank, coming of  foreign direct investment may suffer to some extent. So, the Indian stock market seems to be affected as well.

Chicago Tribune reported:

On Tuesday, the country's central bank, the Reserve Bank of India, increased the proportion of deposits that commercial banks must hold in cash in order to help slow the economy.
"The Indian growth story is continuing to be reaffirmed," said Dhruva Raj Chatterji, a research analyst in Mumbai for fund-tracker Lipper Inc. While growth continues, other forces are building that could throw some cold water on the frenetic pace there.
"It has been a sustained bull run for the past three years because of which India is one of the most expensive markets in the world. Valuations are kind of the higher side," Chatterji said.

He questioned whether the market has overestimated how much Indian companies will continue to earn. Earnings growth has in recent years hovered near the breakneck pace of more than 20 percent.

Chatterji said the amount of money foreigners invested in the country slowed in January.

It seems that it is a big problem for Indian Economy because the price of IPOs (Initial Public Offerings) are increasing as the companies are eager to collect more money from the market in order to make up for the high interest rates of the bank.

The report also said:

Still, funds for U.S. investors continue to show growth. The Matthews India Fund, for example, with assets of about $718 million, has shown a year-to-date return of 2.14 percent.
Chatterji is concerned stocks in India, and therefore the mutual funds that invest there, could face difficulty later in the year because the number of initial public offerings has increased sharply in the New Year. The enthusiasm of investors looking to snag their share of the Indian market risks depleting how much money will be left for investment later, he said.

I think India can work out the problem soon. India has gone through a steady economic development in the last few years and this matter alone has given some strength to the economy. On the other hand, India is still a poor country and needs to discipline its economy more.