Indian Economy And The Factors Affecting It : A Case Study

Omkar Nawlakhe elucidates the aspects of the Indian economy and the comparison with nations as China, Brazil etc. He specifies the problems and includes the solutions towards what is required to be achieved in the economic realm.

If someone looses interest over food due to Dyspepsia, then at such time eatables’ savings can be done, due to the tensed economy due to falling rates of oils is insensate.

It is true but not always. It does not mean that economist are failed to predict about the upcoming economy crisis. In recent history, Nouriel Roubini, Joseph Stiglitzand, India’s Raghuram Rajan and Ruchir Sharma have predicted the forthcoming economy crisis exactly correct. That’s why according to these economists it will be advisable to structure the upcoming years.
Most of the economists warn about the 2016 – 17 economical year. The reason is possibility of devaluation of currency. Most of the people on government level are satisfied due to the falling down of the rates of oil. Due to the low rates of oils, the expenses on fuels can be saved.

This adds some balance money to ordinary people’s accounts, which increases their purchase power. But falling rates are indicator of low demand of oils. This means there is no demand for products and that’s why there are no further investments from businessmen. In such situation, a stop to increasing valuation of currency is considered to be good. But it is rarely noticed that the blocking to currency valuation can prove main lacuna to the economy. Currently, this is the situation due to which economists are predicting the economical problems which India is likely to face in upcoming years. There are certain reasons behind it.

One of the main reasons is China. Everyone agrees that China’s progress rate has slowed down in recent time, but acquiring information about China is so difficult that no one knows how much progress rate has slowed down. But China’s Government denies this. According to Government, China’s economy is still increasing at the rate of seven percent. But it’s a lie. Larry Elliott, an economist from London, has denied the claim of Chinese government in the newspaper ‘The Guardian’. According to Elliot, the per capita electricity expense and railway’s transportation rates and size are significantly decreased. This downfall indicates the falling down economy.

As same as Elliott, India’s Ruchir Sharma has also stated these facts. His predictions are becoming right from middle of 2015 and it can become total fact in upcoming 2-3 years. If this happens, then China may implement two solutions to increase their economy rate. The first one is to reduce its own interest rate very quickly, because China’s interest rate are still more than the American countries. Second, is to gain profit in exportation by devaluation of currency. Till this date China has proven this so one may expect the same scenario this year too.

Next big challenge is of Brazil which has biggest economy of Latin America. A nation in the BRICS. But currently it has fallen down with the inflation rate of the nation becoming 10.5 percent. This indicates that International Monetary Fund will have to intercept in between to control the situation. When Joaquim Levy stepped in as Finance Minister the expectations were high. It was a tensed situation for them due to the large expenses made by the President Dilma Rousseff during 2011 to 2014. From the resignation of Levy one can guess the complicated economical problems.
Likewise European Union situation is also the same. From the European Union, Germany has got some stable situation while other nations are struggling with that. Greece has fallen down with its own economy. Though restructuring its loan system at least three times, Greece is yet to get back on the track. Currently many European nations have given the help to Greece but the question remains that what will happen if they cut out their help with Greece. So according to situation, central European bank has to keep their interest rate low because if they increase the rate then there will be instabilities again which they can not afford.

On this, India has got two big challenges to overcome :

One is the constantly decreasing export since months. Therefore, how to stop it and deal with it is the main task.

• The second is about bank which are on the brink to fall down.The main concern is how to end up the bankruptcy created by unpaid some lakh crores rupees of loan, as well as how to produce the one lakh 80 thousand crore amount, which is required to be eligible for new world banking rules regulating from 2018.

In such situation concentration goes on to the only one nation, America. But there are certain limits on that too. So these forthcoming years will be testament for this critical economical situation.

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