Is Indian Economy moving towards stagflation:? ........................................................................ Today morning my son who is a MBA from IIM(Kozikode) & also a qualified Legal Professional,asked me a question Baba is Indian Economy Moving Towards Stagflation? I was flabbergasted and asked him the reason for such opinion.He listed the following points in support of his apprehension: 1.Growth Rate of the economy has almost gone back the days of 80s when we used to term it as Hindu rate of growth and there is no sign of revival of the economy even after the new Govt took over the rein in May 2014 2.Fiscal deficit continues to alarming and so far the Government has not taken any step to bring it down by hard economic measures like introduction of new taxes and cutting down of subsidies and popular schemes like MGREGS etc.As a result inflation remains high .Although the official figure shows that there has been reduction of inflation in the wholesale market ,the consumers are suffering high rate of inflation which is nearly a double digit figure.An economy can not attract large investment if the inflation is so high.As a result there is no investment in the corporate sector which can boost up the countrys economy.It is true that share market has boomed during the last ten months but it hardly generates any employment ,nor does it create any permanent asset. 3.Banks are still flushed with surplus fund and there is not much pressure on the liquidity. 4.Rupee has remained weak in spite of 20% reduction in the value of crude oil and our balance of payment situation remains alarming.In spite of so much devaluation of INR growth of export remains fatigue. 5.Europe has been going through one of the worst financial crisis and its effect will definitely be adverse on Indian economy. May I request my FB friends to throw some light on the future of the Indian Economy .
Posted on: Thu, 30 Oct 2014 10:59:17 +0000
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