Helping You Build Wealth With Honest Research
Since 1996. Try Now

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  


Economic crisis in India's star state
Thu, 19 May Pre-Open

Here is a puzzle. You have to guess the name of the place we are talking about. The place that we're referring to is currently under the clutch of an economic crisis. Once a region that spearheaded economic growth, its economic progress is now stunted. It is sitting on a huge pile of public debt and seeking a multibillion dollar bailout. What more, the urban unemployment here is as high as 15.2%!

What's your guess? Are you thinking of some European economy suffering the consequences of excess debt? Let us assure that you don't have to go that far. The region we are talking about is own very own state of Punjab.

Yes, Punjab was the heart of the renowned 'Green Revolution' that led to our country's self-sufficiency is food grains. It has been one of the most prosperous and wealthy states of our country. There was a time when Punjab was one of the fastest growing states in India. Now, it is among the slowest. In recent years, while our average national growth rate has been 8.5%, Punjab has registered a much lower growth of 6%.

So what we now hear about the state is a shocking dampener for a fast growing economy like India. If you look at the root causes of the current economic turmoil in Punjab, you can trace the same issues across the country. In Punjab's case, poor governance, excessive reliance on agriculture, sluggish development of manufacturing and infrastructure, and too much spending on populist welfare subsidies have been the main reasons for its economic problems. If you just think about it, you would quickly figure out that most of the other regions of our country are also facing similar troubles.

This is a very grave lesson for India. If basic issues such as the ones mentioned above are not addressed in time, the much-touted India growth story is in danger.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "Economic crisis in India's star state". Click here!