Question

Suggestion of macroeconomic problems of Indian economy

Answer 1

The Indian economy exemplified as a success story of the third world economies just a couple of years ago is at crossroads today limping at a pace slowest in almost a decade showing signs of drifting towards the pre 1991 era. Ironically, the man who steered us clear of the 1991 storm , and is at the helm of affairs now is helpless and at loggerheads owing to constant accusations of policy paralysis, corruption allegations and leadership crises weighing down his options.

The factors that have led to this staggered and slumping growth scenario can be summed up by the following points:

1. High and constantly increasing Current Account Deficit (CAD) :- The increase in CAD i.e the difference between inflow and outflow of foreign exchange in our country has put lot of pressures in the country's balance of payments also leading to weakening of Rupee and high rise inflation.

2. Sharp Deceleration of Industrial production amid waning investor confidence due to uncertain government policies leading to lacklusture investment. The government's efforts to attract foreign investors have failed vehemently despite its efforts to ease up FDI norms and introduce investor friendly policy options.

3. India's expansionary fiscal policy highlighted in its extravagant spending in national policies such as MNREGA and now Food Security, has led to a dramatic fiscal situation by widening fiscal deficits to alarming levels creating macroeconomic imbalances that strain the economy.

4. Global financial crisis coupled with industrial economies beset by sovereign debt, and fiscal and banking problems only aggravates our financial concerns over slowdown.

Considering that India has had remarkable growth record in previous years, its sudden drip seems to be both disturbing and intriguing. The situation however has a silver lining considering the hoard of measures that can be implemented to bring everything under control. They are :

1. Shifting from consumption to investment by clearing the log of pending infrastructure development projects and rationalizing the tendering processes of projects in rail, roads, aviation, etc sectors to promote trade

2. Innovation and investment in agriculture and manufacturing sector by expanding and improvising existing resources and giving extra importance to clean energy and sustainable development.

3. Decrease in government spending and borrowings by strengthening institutional capacity building and higher savings, good and transparent governance to rope in investor confidence and liberalizing finances.

4. Focus on inclusive growth and strategies towards employment generation through skill building measures and improving education at all levels exposing Indian youth to global standards, rather than thumping a heavy hand on liquidity control measures.

5. Increase in bilateral trade with neighboring countries to infuse new possibilities of trade and commerce and enhance friendly relations.

6. Measures to control price rise by regulating market and checking corruption that is prevalent in distorting the supply demand chain.

With the promising measures as these we could definitely aim towards controlling the downward journey of the currency and expect India to retrace its steps towards its previous growth trajectory.

Answer 2

Indian economy depend on macro but have been faced with challenges;

Inflation which is pushed by food and property prices hence making it a very big challenge in the economy

Poor infrastructure,with poor communication and movement its hard to make a plus in the economy instead their will always be a losing match.

With poor educational standards India have experience a lot of challenges in its economic development track.

India has experienced high level of private depths hence blogging the development of the economy.

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