About Me

My photo

Krishna Kumar Singh, also known among friend circles KK and among close relative Krishna; Matriculation from Mithila High School Balour, Darbhanga in 1959, Graduated in Political Science Honours from C M College, Darbhanga, Bihar University in 1963; Joined post-graduate in Political Science the same year but dropped; joined Naxal movement under Charu Mazumdar, Kanu Sanyal, Satya Narayan Singh and Umadhar Singh in between but circumstances compelled to join literary work, clerk, proof readers etc in different publishing houses for livelihood; Finally joined journalism as career in different English newspapers and before my retirement from active journalism, I worked in The Times of India for about 19 years and retired as Chief Reporter  a few years back; continuing in journalism-reading more and more, writing more and more and praying to Almighty more and more-currently writing for different national English and Hindi dailies and magazines..

Tuesday, 27 August 2013


              India's economy, growing fast in the last ten years, has taken worse down turn. Alarming bell is ringing in the entire country. The rupee is in trouble and no body is quite sure what to do about it.Today itself, the Indian currency has tumbled to Rs 65.35 paise against a dollar ! There is widespread anxiety over the fact that the Indian government has yet to curb the currency's downfall since it started its down turn in May this year.Inflation and price rise  are giving agonising moments to the people of India. Recently, the Deutsche Bank, in its report, says " Indian rupee may reach as low as 70 in the coming months" Echoing the similar sentiments, the Economist Jayati Gosh says, " This is big one.But it has been building up for a while due to many reasons: the growing 'current account deficit' (CAD), the industrial slow-down, the lack of infrastructure development, the negative investment in the country." She sees the crisis as evidence that "the model of development which focuses on only GDP growth" has run its course. What is needed now is "wage and employment-led growth".

             Although, I have little knowledge of Economics, I have ventured to write on Indian economy in a number of essays on my sites-www.kksingh1.blogspot.com-----describing about fault-line with our policy makers in shaping the economy of India since independence. In this very topic, I am just putting forward the alarming proportions of Indian Economy, based on the facts with Indian government as well as national and international newspapers, news magazines and websites !

            In the last few years, Indian economy is going on bad shape, which has slowed from its rapid 9 percent growth rate to a forecast of between 5.5 percent and 5.7 percent for this financial year. After the 2008 world economic crisis , vastly affecting the USA, which had to pump huge money to banks from bankruptcy, India had recorded 9 percent GDP growth for at least two years but in recent weeks rupee have tumbled., losing a sixth of its value against the dollar this month alone, Share price have fallen, commodity prices are rising, investment is stalking, growth is slowing and the Indian government is under a huge balance of payments deficit. A sense of impending doom is building. Compounding the fears are signs that other emerging economies in Asia are also vulnerable, drawing inevitable questions as to whether this could turn  into a repeat of the 1997 Asian financial crisis.

         Opinions are badly divided for such beating of Indian economy ! One section believes that part of the problem is not India's alone. With the U S Federal Reserve expected to start tapering off a stimulus programme that has pumped cash into global economy, investors have grown wary on the emerging markets they became so fond of in recent years. Countries running their own current account deficits have borne the burnt of the mood swing: currencies in India, Brazil and Indonesia, among others, have seen drops as investors-pull money out ahead of the Fed's anticipated tightening. Another problem of facts is that Indian economy has some home-grown structural problems has exacerbated the flight of foreign funds. An economist with the Capital Economics in Singapore, Daniel Martin has said, " If you are an investor, you want to put your money where there is going to be growth. The shine has come off India, It is not glaring success story it was a few years ago."Other experts trace problem to the failure of Manmohan Singh's government to push through structural reforms that could boost growth. The ruling UPA led by the Congress Party's emphasis on huge government subsidy schemes, such as jobs for the rural poor, has added to an already big fiscal deficit. Economist Surjit Bhalaa has said, " just trying to accelerate growth from present low level (annual GDP growth is now down to five percent) will help the economy."  More over India imports much more than it exports and so the current account deficit is at an unsustainable 4.8 percent. Until, it brought down, there can be very little hope of reviving investors confidence in the economy.

        The intensity of down-turn is so hard that apart from affecting poor and middle classes in the country, riches have also been badly affected. Mukesh Ambani, a towering industrialist and capitalist,, who lives in a one billion $ 27-storey Mumbai skyscraper complete with swimming pools, three helipads and a 50-seat cinema, is down to his last 17.5 billion $ after the plunging value of the rupee wiped out a quarter of his fortune, in dollar terms. Mukesh Ambani, the chairman of the Reliance Industries, which operates the world's largest oil refineries, has lost 5.6 billion $ of his personal wealth since May one, according to the Bloom berg Billionaires index.Ambanies shares in Reliance Industries have dropped 15 percent since mid-July.Developing economies  excluding China have seen an outflow of 81 billion 4 in emergency reserves since early May, as central banks try to prop up their currencies. Indonesia has lost 13.6 percent of its reserve, Turkety- 12.7 pc, Ukraine-10 pc, according to central bank data complied by Morgan Stanley.Surprisingly, India's Finance Minister Palaniappan Chidambaram , who has tried to reassure investors that "there is no reason for excessive or unwarranted pessimism , failed to give any tangible result.

           Core issues, slowing down Indian growth are now hurting currency-and by proxy, Indian consumers who want to buy, say, an imported phone or foreign car makers that need to import parts. Those fundamental weaknesses-poor infrastructures, unreliable power supply, difficulty in securing land and lots of sticky red tape-are all keeping foreign investments out of the country and that is problem for a country that imports far more than it exports and thus needs to finance a large current account deficit. When the CAD widens, the rupee's decline accelerates further. So even at a time when many emerging markets are looking risky to investors, India is looking riskier than most. In the process , gold is also a big problem in India.. Gold has played an important role in skewing the trade deficit. A century ago, the Economist John Maynard Keynes wrote that India's irrational love for gold was "ruinous to her economic development" and the obsession still runs deep. India's annual production of gold is barely 10 tonnes, so last year it imported 860 tonnes, which were made into jewellery or stored as coins and bars in family safes ! The government is now trying to stem the hunger for gold by increasing import duties. This has revived gold  smuggling, a menace which in the 1960s led to creation of the Bombay now Mumbai, underworld. Not only that, it is estimated that households and Hindu temples are hoarding about 25,000 tonnes of gold bars and coins. Jewellers are lobbying government to implement a scheme that could unearth 10 percent of the hoarded golds.

         Although there is growing anxieties about future, India's middle class may not have lost faith yet in the possibility of economic regeneration. Just we Indian have become afraid of 1997-98 Asian economic crisis.The trigger for the run on the rupee has been news from Washington that the Federal Reserve is considering scaling back-"tapering"- its bound-buying stimulus programme from next month. This has consequences for all emerging market economies: firstly, there is fear that a reduced stimulus will mean weaker growth in the US, with a knock-on impact on exports from the developing world. Secondly, the high-yielding currencies such as the rupee have benefited from a search for yield on the part of global investors. If policy is going to be tightened in the US, then the dollar becomes more attractive and rupee less so. But while the Indonesian rupiah and the South African rand are also feeling the heat, it is India-with its large trade and budget deficits-that looks like the accident most likely to happen.. On past from emerging market crises go through three stages: in stage one, policy makers do nothing in the hope that the problem goes  away. In stage two, they cobble together some panic measures, normally involving half-baked capital controls and selling of dollars in an attempt to underpin their currencies. In stage three, they either come up with a workable plan themselves or call in the IMF. Thus India is on the cusp of stage three !

        What ever may the facts of India's economy down turn, the country has also its own compulsions. Tribal population and their forest are facing dangerous situation as union and state governments have allowed multii-nationals and capitalists to open factories in the forest areas depriving them of their homelands by violating Forest and environment laws Large number of poverty prevails in India. Education and health programmes are dismal in the rural areas where most of the people live in the country. I do not oppose economic liberalisation for the development of the Country. But there are certain basic things, which are best needed for the country like subsidies on food, housing, shelter etc. But subsidies are being gobbled up by rich people like subsidies on petrol, LPG, fertilisers and diesel. There must be some yardstick not to provide such benefits to affluent .Food Security Bill has been now enacted and it will definitely eliminate hunger. For education and health , there are many measures, it must be vigorously implemented. For employment, there is guaranteed job under MGNREG- it must be accelerated. For these welfare measures , need of hour is to stop leakage and corrupt practises ! Huge amounts are given as subsidy or remission to the industrialists and capitalists must be stopped without any further delay. Law must be enacted to give 50 percent reservation in Parliament and sate legislatures to women to empower them completely. Women population are about 50 percent but they are being ignored in India. Large number of scams, which have come up with the entry of economic liberalisation, has also cost the country most. Money earned through corrupt practices must not only be stopped but confiscated. Black money stacked in foreign banks by Indian rich must be brought back- All these measures will bring India into a robust ECONOMY in The GLOBE

No comments:

Post a Comment