Revolutionizing Awareness

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How resilient is Indian economy?

Posted by Admin on May 30, 2012

Structure of the organised banking sector in I...

Structure of the organised banking sector in India. Number of banks are in brackets. (Photo credit: Wikipedia)

http://in.finance.yahoo.com/news/resilient-indian-economy-030000550.html

Equitymaster – 18 hours ago

The growth forecasts for Indian economy have recently been revised downwards. Reeling under gross mismanagement, the Indian economy seems to be in a state of mess. However, the Finance Minister feels otherwise. He believes that India is in a better position than other economies to deal with it on account of high savings rate and domestic demand along with regulatory mechanisms.

Given the current circumstances, the picture portrayed by Finance Minister is too rosy to be real. He draws support from a huge young population and hence a robust domestic demand, a strong Indian banking system and diversified exports base. However, with disturbances in the global economy, it is only logical to expect that demand of exported goods will slow down.

The role of major Asian economies, especially India and China, in running the global growth engine can’t be undermined. These economies have the advantage of a huge chunk of young population that will keep the demand vibrant and add to the productivity. However, while China is making the right moves by shifting focus to tap the domestic demand, India seems to have landed itself in a very precarious situation.

With twin deficits gaping us wide in our face and rupee in a free fall, an optimistic tone for Indian economy looks so out of place. Our regulatory mechanisms might have worked in the past; however, the country seems to be falling too short on action in policy front. This is keeping foreign investors at bay. The absence of domestic funds and lack of foreign investment will lead to infrastructural deficit thus wasting the potential of youngsters. It is said that tough times can teach a lot. Looks like our time to learn has come. Hope the Government stops fiddling while the country is burning and wakes up to the need of reforms before it is too late.

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