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Tuesday, 16 July 2013

Why Indian economy is slowing down.

indian economy

The latest GDP numbers of Indian economy has been out few days ago and looking at current GDP rate which is hovering at 5.5%, one thing is quite clear that Indian economy is facing a tough time as the current GDP rate of 5.5% is almost 3% below the from the high of 2007 during that period Indian economy was booming at rate of 8.5%.


Now the time has change, there is not a recession kind of situation currently but definitely the problems are there as the growth of Indian economy has lost its way Government of India needs to refresh its policies in order to add a boost to exhausting Indian economy so that GDP rate comes back to the track.

But for now we wil discuss the Five major reasons for the slowing down of Indian economy. We will try our best to answer your questions like Why is indian economy slowing down, why indian GDP rate is decreasing and many more.

1. Delay in policy implementation by Government of India 
Many policies and bills are awaiting from a long time to get approved even the proposal of Allowing 51% FDI in retailing is still hanging in middle from a long time. GOI should understand that policies applied during Financial reforms of 1991 had worked brilliantly for India, but now the country needs new sets of policies and reforms to boost the slowing economy. The lacklustre behaviour of Indian Govt. is damaging the image of India globally and sending a impression to the world that Govt. is not really concerned for the growth of Indian economy.

2. Due to high inflation, interest rates also remains high for industry 
Inflation is a serious problem for Indian economy from many decades and honestly there isn't any solution available for it as high inflation is mainly because of high fuel prices. As we all know we have to import more than 80% of our demand and sell it to consumers here, at high prices thus increasing inflation, so in order to control the inflation RBI increases interest rates due to which Industry get loans from banks at higher interest rates only as a result Companies reduces investment in India which makes the whole economic cycle of the country slow.

3. Tragic global economic scenario affects India too 
There is no doubt that Indian economy is passing through the tough phase due to our internal problems but the economic environment globally is also not very promising instead the current problems of European countries have affected Indian economy too as in the age of globalization outer factors are also important for any country's economy to grow.

4. The incrreasing corruption and scams in the country 
Corruption existed in India from very starting but in recent times it has grown to a new level that now it is cramping the growth of the Indian economy. Recent charges of corruption against Government of India has disturb the sentiments of investors now they don't see India as a safe place to invest which has affected the foreign investment in India.

5. India is facing leadership crisis at the centre 
India is facing a serious lack of well coordinated Govt at the centre as the current govt headed by Dr. Manmohan Singh seems to be working with no plans in their mind as they are taking Indian economy nowhere and the worst thing is the failure of Dr Manmohan Singh, the man who changed the whole indian economy with his reforms in 1991 when he was India's Finance Minister but with this innings as India's Primeminister he is considered as total failure and 'Underachiever' even global media is regularly very negative for Indian Pm.

So these are the major reasons for the slowing down of Indian Economy but the Indian growth story is still alive as we Indians has a habit of moving slowly but steadily and in the end we wins the race. Currently the situations are not in our favour but as soon the above problems settles down, we are back on track on 9% growth.


Image: FreeDigitalPhotos.net

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