Biggest Threats to India's Sinking Economy

Bangalore: The current economic scenario in India is no better than a sinking ship. The continuous fall in rupee, the slow growth rate of a decade and the inflation are signs to a dooming economy. Rupee has touched all time low of 65 against dollar and there have been speculations that it might cross the 70 mark soon if the pressure continues. Traders are skeptical about the bottom price of rupee and the inability of government to reassure domestic and foreign investors, reports Bhaskar News.

The Prime Minister, The Finance Minister and the Finance Ministry itself are trying to find out a way to curb the situation from going bad to worse. The Finance Minister is heard saying that there are good chances of the Indian economy improving by the third and fourth quarters.

The challenges in front of the Indian economy are many and needs to be worked upon immediately before it reaches a state of irreversibility.

1. Credible Fiscal Policy

The ever increasing fiscal deficit as a result of the imbalance between Indian government’s revenue and expenditure is a major threat. The foreign exchange reserves, that were sufficient to serve imports for one and a half year during 2007-08, are now estimated to serve imports for only about seven months. The fiscal deficit figure also shot up from 3.5 percent in 2007-08 to 5.8 percent for the financial year 2011-12.

Expenditures on wages and subsidies should be minimized and instead directed towards productive investments such as education, infrastructure, health and other areas which could enhance growth.

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