The big problem that India urgently needs to address
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In such an environment then India's high fiscal deficit becomes a cause for worry. India does have the makings of becoming a fast growing economy in the years to come especially when domestic consumption is healthy and demographic profile is favourable. That is why noted economist Jim Walker feels that these positives could be undermined by the government's failure to address excessive spending and the country's weak fiscal position. Walker states, "We're now in a world where budget deficits are going to be the focus of everybody's attention, especially every rating agency and investor. And India is going in the wrong direction."
There have been structural issues in the spending patterns of the government for quite some time now. Government spending is good but only when it is towards productive areas such as infrastructure, education and healthcare which have the potential to take India's growth level several notches higher. The problem is that too much spending is being diverted towards subsidies, interest payments and government salaries which are doing nothing much other than bloating the government's debt on the balance sheet. The earlier the government realises this and begins to address these issues, the better off the Indian economy will be. Otherwise, the country will be faced with the prospect of low confidence in India's thriving corporate sector and low GDP for years to come. But given that the current government is busy trying to grapple with scams, terrorism and political issues, we wonder if the urgency to reduce debt will be felt now.
Do you think that in the current global environment, India's high debt is a cause for worry? Share with us or post your comments on our Facebook page.
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India is now more attractive in segments such as electrical goods, household goods and textile. Indian manufacturers are set to get incremental business in both the domestic as well as the foreign markets. This is evident from the fact that India's export of electronic goods surged 56% while its import of Chinese electronic goods fell 32% during FY11. MNCs will also step up investment in capacity expansion in India. Manufacturing growth in these sectors and the related vendor eco-system will lead to overall economic development and more revenues to the exchequer. While it is still pre-mature to quantify the benefits, it is nevertheless news to cheer for India Inc.
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Indian stock markets managed to stay afloat and notched marginal gains of 0.3% during the week. Heavy buying was witnessed in consumer oriented sectors. The world markets fell but in varying proportions. Germany (down 6.3%) and France (down 5.5%) were the top losers.
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04:56 | Weekand investing mantra |
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7 Responses to "The big problem that India urgently needs to address"
Jagdish Lakhani
Sep 11, 2011The big problem is undoubtedly corruption.This Govt.is so deep in these filthy scams it is literally paralyzed.In the present world economic scenario it is imperative that Govt.should be devoting all its energies in solving huge problems facing our country.
shome suvra
Sep 11, 2011The Fiscal Responsibility and budget management is a crude tool, yet did indeed help cut the fiscal deficit.In good time it should be 3% and during recession it should be 6%.
sethu
Sep 11, 2011Govt. salaries are too high for the work they deliver.Major portion of the Govt.staff are corrupt and make multple times of their salary as corruption.In addition they are never accountable .
manoharkantak
Sep 10, 2011The big worry for me is India may face a situation like Greece. We are trying to conceal many facts which accumulate and lead to crisis. Crisis cannot be concealed, sooner or later it will happen. The size of our country is allowing the crisis to be delayed.
Pramod
Sep 10, 2011Who cares about debt. It is race to bottom. Swiss Govt is latest addition. Just print money and solve all problems. No one is interested to address actual problem.
ATMA RAM KEJARIWAL
Sep 10, 2011Yes
Subsidies to farmers and other poor people can be discussed.
Govt. should analysis wasteful expenditure/subsidies like Air India etc. Another area can be HSD driven cars, need steep rise in excise duty etc.
M. Bersohn
Sep 11, 2011The government needs to collect its taxes. Too many people evade some or
all their taxes, producing of course inflation.