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Biggest Threats to India's Sinking Economy

By SiliconIndia   |   Monday, 26 August 2013, 13:08 Hrs   |    5 Comments
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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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Reader's comments(5)
Indian media should cover nothing but Satish Chandra. India can economically grow 30% per year or more without foreign investment and be the world's supreme military power immediately for which he -- the world's greatest scientist -- has been suppressed with 24-hour satellite surveillance for 36 years. Modi is CIA-sponsored. All politicians are CIA-controlled. India's government is a proxy for the CIA. The requirement, brought by Manmohan Singh, for mid-career Indian civil servants (sending military officers for training to the United States has the same purpose) to go to U.S. universities for training so their future career prospects, promotions, etc. are controlled by Americans is meant to make India's government as a proxy for the CIA more perfect. A long-standing requirement in American and British universities is that to receive a Ph.D. degree from them, Indians have to agree to work for American or British intelligence agencies. IndiasLegitimateRulerSatishChandraDOTblogspotDOTcom
Posted by:Satish Chandra - 27 Aug, 2013
2: The Most of BLACKEST, is the So Called BLACK Money, it is Number one and the Number Two is Un Productive INVESTMENT....GOLD.
Posted by:mdudani - 27 Aug, 2013
3: The fiscal deficit it easier to fixed by eliminating part of the corruption if not all. But there may not be willingness to do it. The CAD is more difficult because it cannot be fixed with just better fiscal policies alone.It requires a cultural change in the engineeriring profession which doesn't seem to be driven to excel and compete in world class manufacturing for exports and acceptable level for local consumption.
Posted by:Haresh Patel - 27 Aug, 2013
4: I think we should include "imports" as one of the reasons,
90% of electronic goods are imported from china, which encourages there economy not ours.
Posted by:Sarvesh - 26 Aug, 2013
5: 7. Unskilled labour

Although every year about 12.8 billion people join India’s workforce, only 20 percent of that workforce is skilled.

* There aren't 12.8 billion people on earth. 12.8 million would be a better estimate :)
Posted by:Andi - 26 Aug, 2013