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India most vulnerable amongst its peers
Thu, 10 Oct Pre-Open

The Indian economy since quite some time has been in an unstable state on various fronts. Be it the fiscal deficit, current account deficit, inflation, growth, or the rupee. All are in a downward spiral.. And the fact is that the current scenario perfectly aligns with 1991 crisis, when Indian economy was on the verge of a collapse. The situation during that period was in such a miserable state that the country had to pledge its gold with the International Monetary fund (IMF) for an emergency loan. The government of India (GOI) had to make radical reforms in order to bring the economy out of the woods at that time.

An article in Mint mentions that, in 2013 IMF expects, most of the emerging markets to grow at much lower rate than its earlier prediction. And among various emerging countries, Indian growth forecast is downgraded the most by 1.8%. This is more than three times the average reduction of all the emerging markets. Concerns like slow growth rate, rising inflation have too been highlighted in the latest report of IMF.

Industries across sectors are facing unprecedented challenges in sustaining growth and profitability. The government on the other hand has its sight firmly focused on the 2014 elections. In such a challenging scenario if the international confidence for any economy evaporates, the outflow of capital will be that much more rapid. This would further put pressure on the economy.

In crux, the economy is flashing red signals. While the government has acknowledged about various problems, it does not appear that it is looking to find solution of major problems. An extra push of radical reforms is required which is still not being seen. Also, if the government deals with major issues like inflation, policy delays, and slowdown in various sectors then the economic recovery could very well be on the cards. But a gradual recovery seems a more likely bet than a very strong one.

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