Is India's Growth Story Over?

Rupa Rose Nitsure, Chief Economist at the Bank of Baroda says, “This is a make-or-break situation for India and the government has to step on the panic button,if the government doesn’t step in now, India’s sovereign ratings may be jeopardized.” In Standard and Poor’s cut India’s credit rating outlook to negative and expressed concern over India’s fiscal and current account deficits. This cut in the rating will make it difficult for the Indian companies to ask for money from overseas.

Chandrajit Banerjee the Director General of the Confederation of Indian Industry said that the comprehensive economic revival package has to be announced as early as possible. According to the gross capital formation or the addition of stock of factories and machines has increased by 5.3 percent and this shows a grave crisis of investors’ confidence said Rajeev Kumar, economist at Ficci.

It seems as if India might fall into the same crisis situation that was in 1991 where India had to pledge its gold to raise foreign exchange to pay off debts. Indian firms have to pay back $137 billion to its lenders and the foreign exchange reserves that they have is $290 billion. Kumar Rajagopalan , CEO of Retailers’ Association of India said that the customers have been cautious with discretionary spending in times of uncertainty and the slowdown in the growth has added to inflationary pressure impacting the purchasing decisions.