The economic scenario of India
The alarm bells which were previously raised due to farcical depreciation of the Indian currency are now blaring. It has caused even the Government of India which had been adamantly in the denial mode wake up as well as takes note of the crisis which has befallen the nation. Deceleration of growth is the primary reason for the prevailing economic crisis in India.
Rather than sound executive decisions which would help in strengthening the economy and in turn boost growth, the regime and tenure of UPA-II is marked by financial profligacy, political populism, policy paralysis and corruption. Every economic growth indicator has reached the lowest points in decades. Even international rating agencies have positioned India among the lower rungs of all socio-economic indices as they have been critical of the functioning of the government.
Inflation is at its peak while deficits in both the current account as well as the fiscal have peaked at alarming levels and required to be brought down. Despite all of this there’s still a light glowing at the end of the tunnel. The present economic scenario after all, might not be very dark or disappointing.
As per Reserve Bank of India:
In fact, as per the chief of Reserve Bank of India (RBI), India has not been affected by any sort or form of an economic crisis. Even though there has been a slowdown in the economy (albeit a significant one) the forex reserves of the country still remain sufficiently large. The RBI chief further believes that the chance of India requiring IMF’s assistance for the next five years is next to nada. The external debt to GDP of India stands at 22 per cent.
India holds a reserve of $ 280 billion which is almost 15 per cent of GDP. This translates into three-fourth of the country’s debt can be payed from its forex reserves. Presently short term external debt stands at ten per cent of GDP. Hence, the country possesses enough reserve to take care of its debts.
Role of IMF:
Although, the RBI might be correct in stating that the forex reserves of India is enough, the fact that the country is still faced by numerous problems remains unchanged. Not approaching the IMF for emergency funding is not an acceptable reason for the country to stay content about the low growth and financial mess.
The government’s efforts:
Granted that some reforms have been undertaken by the Union government, there is a need to do still more. The need of the hour is for India to get rid of the prevailing environment wherein unnecessary regulation, corruption along with red tape is eliminated. The failure of public private partnership concept has been the chief reason for the country’s infrastructure story being a short and dull one.
Conclusion:
Once the bureaucratic hurdles are sorted out in a transparent and time bound manner, investments within both manufacturing and infrastructure shall become forthcoming. This should automatically set off a chain of economic activity, for which the country has been deprived of over the last two years.
