The decade had a promising start in 2010-11 with GDP growth of 8.4 per cent, bringing down fiscal deficit to 4.7 per cent from 6.4 of GDP in 2009-10, as well as containing current account deficit to 2.6 per cent from 2.8 per cent in 2009-10.
The GDP decelerated sharply to a nine year low of 6.5 per cent during 2011-12 and even below 5 percent in 2012-13.
The symptoms are quite evident i.e. sinking rupee, rising inflation, rising prices of commodities and fuel.
But, government seems to be engaged in addressing the symptoms rather than curing root cause of the problems.
The GDP decelerated sharply to a nine year low of 6.5 per cent during 2011-12 and even below 5 percent in 2012-13.
The symptoms are quite evident i.e. sinking rupee, rising inflation, rising prices of commodities and fuel.
But, government seems to be engaged in addressing the symptoms rather than curing root cause of the problems.
Government claims that CAD is rising due to increase in demand for dollars for Oil and Gold imports.
However, with subdued equity inflows, depleting foreign exchange reserves, rising external debt and deteriorating international investment positions, the macro economic scenario is getting awry and nothing seems to be going in right direction with inflation at over 9 per cent in the first eight months of 2011-12, before softening moderately in December 12 and remained sticky in the range of 6.9-7.7 per cent.
However, with subdued equity inflows, depleting foreign exchange reserves, rising external debt and deteriorating international investment positions, the macro economic scenario is getting awry and nothing seems to be going in right direction with inflation at over 9 per cent in the first eight months of 2011-12, before softening moderately in December 12 and remained sticky in the range of 6.9-7.7 per cent.
With GDP growth slumping to decade's low of 5 per cent in 2012-13, and no visible pick-up in any key levers of the economy "the situation remains grim". While the fiscal deficit situation will not allow government expenditure to go up, every means need to be explored for raising consumption and investment demand.
Measures like Reserve Bank lowering interest rates to boost economy and announcements (rather ad-hoc) regarding FDI increase in key sectors may provide interim relief in correcting sentiments but may reflect only in long term.
There has been policy paralysis on literally every front including Power, Telecom, Retail, Infrastructure, Real Estate, Agriculture, Service and Manufacturing sector.
This country has not seen any new green field project being set up for a long time. There are numerous hurdles at every stage i.e. land acquisitions, approvals, clearances, permissions, finance. Regulations are all time high making conducting business a difficult proposition.
India has unique structure with layers of markets which works as insulation to external factors. We need to work towards further strengthening these layers and penetrate further, efficiently and effectively, into lower layers.
The social and infrastructure development go hand in hand. Poverty can not be addressed through 'Subsidies' being offered to poor, but opportunity.
An 'Opportunity' to Learn more and subsequently Earn more!
One thing which I don't understand is, that even though right people are in right place at right time, i.e. an economist and intellectual PM, an experienced FM along with experienced Cabinet and a learned professional at Planning Commission, how the economic scenario and sentiments are sinking?
The 6000 administrative officers are far less numbers to administrate the country and they should not be further dragged into running businesses for Government.
Government wants to bring in inclusive and sustainable development, which is possible only with participation of private sector, which is inevitable in country's growth. Involvement of Private Sector means inclusion of large number of countrymen as well as foreign investors to invest, contribute and participate in India's growth story.
Government should work as a facilitator and provide effective and efficient governance, conducive environment, favorable and proficient policies to enable people conduct businesses and contribute to one of the fast emerging markets of the world which is eventually also the largest democracy in the world.
