Article;
http://economictimes.indiatimes.com/news/economy/indicators/recession-2011-2011-could-be-worse-for-india-as-us-recession-looms-large/articleshow/9522482.cms
Comment;
Right now the biggest challenge facing Indian economy is inflation. And, as far as inflation is concerned the drop in investment in WORLD market and economic activity would help INDIA in managing its price situation. Since, Europe and the US are stuck in their own problems and interest rate on government bonds in Europe and the US are falling the chances are that the investors will face INDIA and other emerging markets where interest rate are much higher as compared to the developed world. As far as, growth-rates are concerned INDIA's growth rate at 8% looks more attractive than most developed countries. I do not think there is a need to worry about INDIA's growth rate since our main problem is inflation and it is inflation which has hold INDIA's growth momentum. Moreover, INDIA looks more concerned with domestic demand however fall in exports is a concern form the point of view of balance of payments but imports can accommodate the demand pressure due to rising fiscal expenditure. Since global economy and demand is weak INDIA should see the present crisis as an opportunity to relieve domestic demand for food. If INDIA can not grow 10% then the problem must be attributed to inflation and not external events. However, the present crisis is going to help INDIA in form of lower prices whatever little. But this time i agree that the possibility to escalate demand by lowering repo-rates will not be available due to rising demand without government's will to ease rising prices.
http://economictimes.indiatimes.com/news/economy/indicators/recession-2011-2011-could-be-worse-for-india-as-us-recession-looms-large/articleshow/9522482.cms
Comment;
Right now the biggest challenge facing Indian economy is inflation. And, as far as inflation is concerned the drop in investment in WORLD market and economic activity would help INDIA in managing its price situation. Since, Europe and the US are stuck in their own problems and interest rate on government bonds in Europe and the US are falling the chances are that the investors will face INDIA and other emerging markets where interest rate are much higher as compared to the developed world. As far as, growth-rates are concerned INDIA's growth rate at 8% looks more attractive than most developed countries. I do not think there is a need to worry about INDIA's growth rate since our main problem is inflation and it is inflation which has hold INDIA's growth momentum. Moreover, INDIA looks more concerned with domestic demand however fall in exports is a concern form the point of view of balance of payments but imports can accommodate the demand pressure due to rising fiscal expenditure. Since global economy and demand is weak INDIA should see the present crisis as an opportunity to relieve domestic demand for food. If INDIA can not grow 10% then the problem must be attributed to inflation and not external events. However, the present crisis is going to help INDIA in form of lower prices whatever little. But this time i agree that the possibility to escalate demand by lowering repo-rates will not be available due to rising demand without government's will to ease rising prices.
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