Challenges of the current Indian economy

December 8, 2010 By Leave a Comment
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The year 2010 showed an optimistic beginning for the Indian economy. 2009 ended with 18.5% growth rate in the manufacturing sector, which was the highest in the last twenty years. The anti-crisis measures that India took as a counter step for the financial downturn proved her resilience. The economic forecast for the current year and future is promising. But this optimism is halted by the challenges that are imposing on the Indian economy.

In the budget of 2010-11, the financial minister has outlined three main challenges that the present Indian economy faces. The first challenge is to get India back on the right track of growing GDP. The target is to reach at least the 9% growth rate, so that achieving double-digit number GDP will seem real and feasible. The second concern that India has to tackle is to bring about a more inclusive government wherein no individual or community is denied an opportunity for growth, and where everyone gets the growth benefits. The third challenge, and the most difficult one perhaps is to address government loopholes at different strata, to improve public services, and to perk up delivery mechanisms.

Other than these challenges, of course there is inflation always threatening to bring the Indian economy down. Food price rise due to failed monsoon, gas, petrol and diesel price hike result in an economic spiraling effect.

All these challenges call for a change in the reform policies. The immediate step that India has to take in order to fight these challenges is to consolidate its growth. There is an urgent need for appraisal of public spending, and to mobilize resources so that it can bring about economic productivity. The stable government and its continued steady performance, and the high domestic savings and investments in the recent years are indications of the growing Indian economy.

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Urbanization Concerns: Investing in Indian Economics

November 10, 2010 By Leave a Comment
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Progress is rarely a kind creature – it often proves itself to be contrary, offering the good and the unexpected in equal turns. Investors understand this, knowing that there can be no success without eventual failure. The two forever tangle. They must follow each other, with profits always dwindling and security always fading away. This is the concern of all businesses; and such concern has been offered to the seemingly perfect Indian economics.

With the emergence of the free market, India has been able to offer the world an impressive variety of agricultural efforts. Farmland is considered vital; forests are producing high quantities of timber; and products are unique to this section of the globe. These qualities tempt investors, leading them toward the notion of flinging their dollars toward a supposedly flawless idea.

Such an idea does not exist, however. It never could. There are always consequences to the quick rise of an economy and India is already facing one of these consequences: urbanization. With the sprawl of a population (and the introduction of countless outsourced companies and businesses), there is a sudden call for land – cities are stretching beyond their former borders; villages are being hastily expanded; and the amount of acres that can be cultivated for growth is consistently decreasing.

Urbanization has found India and its price can be a potentially heavy toll on the country’s most vital of exports: agriculture. With the populace trying to match the pace set by the rest of the world (and seeking to expand all boundaries), natural resources are being lost. There has been an increase of farming, mining and other activities; as well as a call for miles. This has forced many to reconsider the notions of investing within India. There is a worry for the future.

And this worry is a reasonable – even if settled still in the distant days. The urbanization of a country must be noted before any investments are made.

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Dr. Manmohan Singh, a visionary

August 5, 2010 By Leave a Comment
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When India entered the 90s of the preceding century, its economy was one big disaster. Unpaid balance, untenable fiscal deficit, no foreign investors, and not enough foreign exchange reserves: in short India was on the brink of bankruptcy. The country needed someone to turn the economy upside down, to take some drastic steps, and dare to take risks. Enter Dr. Manmohan Singh. When the then Prime Minister Narasimha Rao appointed Manmohan Singh as the finance minister in his government, the onus fell on him to turn the tide around.

Dr. Manmohan Singh was a true visionary. He knew that risk taking was part of his profile and he was ready to take it. In an interview given to PBS almost a decade ago, he recalled what he told the Prime Minister then,” It is possible that we will still collapse, but there is a chance that if we take bold measures we may turn around, and that, I said, is an opportunity. We must convert this crisis into an opportunity to build a new India, to do things which many people before us have thought and said should be done, but somehow were never done. It is this risk taking spirit in him that brought India to where it is today: a growing economic superpower. In fact, India is expected to replace Japan as the third largest economy by 2012.

The reforms that he brought:

It was under his constant watch that the RBI was forced to control the urge to draw from itself to fund any internal deficit. For so long, RBI was the backup fund for any internal deficit, which in turn slowed the economic progress. He gave free reigns to private business entrepreneurs and many regulations and laws on them were lifted. Thanks to him many public sector companies were privatized. Thus was born the liberalization of the Indian economy and India turned into a capitalist economy from a socialist economy. He is rightly called as the Father of Indian reforms.

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Indian Economics: Free Market Principles

April 28, 2010 By Leave a Comment
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The world of finance is often baffling. There are endless terms and technicalities to recall; each with its own subtle variations and not so subtle demands. The common man is often left frustrated by the many meanings, the overwhelming explanations. There can be no understanding of them, it is assumed. There can be no method within this monetary madness. Each attempt to find one fails – spectacularly. And, when the notion of the free market is tossed about, most feign interest and try to shield their own confusion.

That confusion is not necessary, however.

When wishing to learn of Indian economics, individuals must also learn of the free market. This does not have to be the terror it has often been deemed, however: a force of dollars and their potentials, the too hectic trade of wares. Too many believe these principles cannot be simplified for the masses. But they can – and from this can come an understanding of how a country has risen among the world powers. For foreign traders who work with companies such as UFX Markets Trading, know more about the state of the foreign economies, which commodities are in demand, and are even using online trading methods for convenience.

Simply defined, the free market principles that guide India are ones lacking the expected restrictions. The government does not intervene with importing and exporting (beyond the creation of necessary laws). Instead trade is dominated by the practical philosophy of supply and demand. Businesses can create their own policies, prices and economic decisions. There is no regulation or forced costs. Instead the market is shaped by individuals and their choices.

This allows for India to offer competitive rates among the world – which has made it appealing to outside nations, each wishing to take advantage of the stable prices and plentiful resources. Through a free market, the country has been able to grow exponentially within a matter of years (since 1991, specifically). It is now a challenger to the expectations of others; and it is constantly succeeding in shattering those expectations.

The free market concept does not have to inspire concern. It should instead inspire envy.

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