NEWS:
Since the past nine years, this quarter has been a real slump for the Indian economy. The GDP has slipped down to just 6.5% . Simultaneously, the rupee has also hit a new low of Rs 56.52 thereby making imports all the more expensive. Due to this, the prices have skyrocketed leaving lesser hopes for the nation.
BACKDROP:
In the previous quarters, the fiscal status of the world has undergone a sea change. On one hand, the euro is losing its strength as many Eurozone countries like Greece are defaulting.On the other hand, even though dollar is doing well, their export items are becoming less and less competitive. This has led to the global slowdown and is now slowly infecting our nation. The Indian Rupee has become weak and there is a glut of commodities.
MY OPINION:
The reasons for this crisis are: declining investments and policy paralysis. As a result of the rupee depreciation, the global investors are losing faith in our country's investment havens. Also, the major drawback for us is the political instability in the central government.Whichever policies are suggested by the UPA II; are vehemently opposed by the opposition as well as coalition parties.
But it is crunch time now. We rather wake up and face the reality. They are only three options for us in order to recover from this crisis namely Fiscal stimulus, External stimulus and Supply side changes.
The first path is not feasible as our government is facing a high deficit. the second is tough as the world economy is not at a very good pace. But supply side changes can surely change the status!!The government should focus on boosting investments by encouraging infrastructural development. They should decrease the amount of subsidies and take bold initiatives in retail. This would help to kick off a virtuous cycle. A journalist very rightly suggested that the cash reserves with the public sector companies which are approx. Rs. 6.6 lakh must be utilised.
All these measures may save the sinking ship!
Since the past nine years, this quarter has been a real slump for the Indian economy. The GDP has slipped down to just 6.5% . Simultaneously, the rupee has also hit a new low of Rs 56.52 thereby making imports all the more expensive. Due to this, the prices have skyrocketed leaving lesser hopes for the nation.
BACKDROP:
In the previous quarters, the fiscal status of the world has undergone a sea change. On one hand, the euro is losing its strength as many Eurozone countries like Greece are defaulting.On the other hand, even though dollar is doing well, their export items are becoming less and less competitive. This has led to the global slowdown and is now slowly infecting our nation. The Indian Rupee has become weak and there is a glut of commodities.
MY OPINION:
The reasons for this crisis are: declining investments and policy paralysis. As a result of the rupee depreciation, the global investors are losing faith in our country's investment havens. Also, the major drawback for us is the political instability in the central government.Whichever policies are suggested by the UPA II; are vehemently opposed by the opposition as well as coalition parties.
But it is crunch time now. We rather wake up and face the reality. They are only three options for us in order to recover from this crisis namely Fiscal stimulus, External stimulus and Supply side changes.
The first path is not feasible as our government is facing a high deficit. the second is tough as the world economy is not at a very good pace. But supply side changes can surely change the status!!The government should focus on boosting investments by encouraging infrastructural development. They should decrease the amount of subsidies and take bold initiatives in retail. This would help to kick off a virtuous cycle. A journalist very rightly suggested that the cash reserves with the public sector companies which are approx. Rs. 6.6 lakh must be utilised.
All these measures may save the sinking ship!
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