The Indian economy though prospering is exhibiting signs of growing risks. Poverty alleviation, farm sector reforms and rising asset prices are areas of concern. Managing rising reserves, higher interest rates and inflation besides overvalued rupee also poses formidable challenges.
The Indian economy is on the fast-track growth trajectory, reflected by rising bank credit into diversified sectors, resilience in the farm sector, impressive performance in the services and manufacturing sectors, rise in exports and massive inflows through Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) routes. The growth story should bring cheer to the millions of young Indians, who are expected to be benefited through the demographic dividend, in terms of more gainful jobs, particularly in a world where many countries are transiting to ageing societies.
The progress report of the Indian economy thus presents a very pleasant picture. But is this progress sustainable in the long-run? Are there in fact signs of deceleration already? Are there growing risks on the horizon?
A critical analysis of the overall macroeconomic indicators show does danger signals: These are with regard to the very slow process of poverty alleviation, dismal face of rural India, rising unemployment rates, critical agrarian scene and very importantly rising prices, inflation and interest rates. To this long list may be added the problem of worsening current account deficit, slow fiscal consolidation and the snail's pace in infrastructure development. |
