My Views on the Indian Economy

Sensex is infinitesimally over 16000, one dollar is equivalent to `53.20, the IIP is at an all-time low. To cut it short, situation looks bad to a common man, yet the economists say that the worst is yet to come. The discussion enters the phase where it has become only discussion and no work. The volatile markets and the unsupported economy have become a trend in the Indian market. The story of FDI is yet another dispute and a topic of just political importance. The rupee is on a never ending height of never having a strong value. The Prime minister and the RBI came up with a plan of buying dollars and then selling them (to increase the value of Indian Rupee), but then it was a temporary solution and hence dropped. So the situation demanded presence of US dollars in the country, and as a part of the plan FDI came into the scenario.

A quick glance, FDI is Foreign Direct Investment which allows foreign investors in the country to set up business. In India’s case it is the retail giants like Wal- Mart which have shown interest.

What’s IIP?

Index of Industrial Production it is the calculation of the industrial production in the country which has fallen sharply when compared to last year, the predictions were much higher and now the numbers have caused a flurry in the National Stock Market. The petroleum prices had been very high and now there has been a relief of `2 in a span of fifteen days, in spite of the fact that the rupee is depreciating. This is a nice way of calming down the people for a while and to show that the government is thinking about the people and hence according to the govt. we should agree on FDI.

The Indian investors are planning to change bases and invest in other countries, because of the unstable policy of the Indian Government. What needs to be analysed is that, getting the dollars in our country is a tricky choice, since they investors do not assure of how long they will keep their money in our country. The better option would be to encourage the trade and investment in India itself the process may take time but will create a strong base for the Indian economy; this can be the stepping stone towards increasing the rupee value.

Why does the American Dollar have demand?

The reasons are simple, one, they are the strongest economy, that’s because they have their own investors investing in various countries, and their import is lesser than that of ours. Second, the base of the economy is solely theirs. Hence there shouldn’t be a doubt why they have the highest number of Billionaires.

Why not FDI?

FDI in retail is a risk to the small traders and Kirana stores which have been prevalent in our country for a long time now. The families of these stores are dependent on it, and retail giants can steal that. Undoubtedly the retailers would provide more choice, quality service and competitive prices. Sometimes big numbers might not turn out to be as swanky as they look, the competition should be within us first and then with someone else. Instead supporting Indian Investors with policy which encourage them and not scare them would make our economy stronger and make us independent of any other country. Japan is a wonderful example of this.

The economy looks bad, the government is looking for profit, and the parliament sessions are more of fights than of any useful discussion. It’s more of an attempt towards temporary solution. A long term solution would be to make our ground now; this is the right time to do. Regardless of the time taken this is the safest option.