July 19, 2013

The need for credit expansion in India

India had been one of the fastest growing economies till early 2011. For almost half a decade before that, along with China, India was clocking over 8 per cent GDP growth annually and talks among analysts were ripe that India, along with its neighbour, would spearhead Asia’s rise in the new world order of the 21st century. However, things have gone awfully wrong for us ever since! The growth rate has kept plummeting, ebbing now at less than 5 per cent in the previous financial year; even till date, there is little light at the end of the tunnel. Two of the foremost reasons for such bottoming out are dried up investments and a rising current account deficit, which are becoming worse with each passing year as the burden of the global slowdown becomes heavier. While our current account deficit has reached a record 4.8% of GDP in FY 2012-13, as per a recent chamber of commerce report, new investment proposals from domestic and foreign entrepreneurs have dried up by 75% as compared to the previous year. As compared to 2,828 investment proposals in the fiscal year 2011-12 worth Rs.6 lakh crore, the figure in FY 2012-13 was 697 proposals worth Rs.1.4 lakh crore.

Ever since the liberalization era of early 1990s, Indian lawmakers had been obsessed with foreign investments and foreign capital, as if foreign companies were the panacea for our economy and ultimate messiahs to move our economy forward. And hence, the potential of our domestic capital and investments was thoroughly ignored. The domestic financial infrastructure in terms of developing an indigenous credit market was given a cold shoulder and all policy weight was put behind attracting foreign investments. Critics were silenced with the argument that emphasis is given on FDIs and not FIIs – as the latter had been a major catalyst for the infamous South East Asian economic collapse back in the late nineties. Our policy advisers, who are mostly accustomed to aping tried and tested economic doctrines instead of formulating something that is country specific to India’s economic environment and culture, couldn’t see the danger lurking. As global recession set in to full effect, the automatic depletion of FDI was a foregone conclusion. And as we had been over dependent on foreign investments – and thus had kept our indigenous credit infrastructure half-baked – there were no defenses against our economy flattening!

Share/Bookmark

5 comments:

aabha roy said...

Deliver your love to your loving brother on this Rakhi festival with designer Rakhi along with Sweets. Just click at www.usa.rightflorist.in/rakhi_usa_product.asp and Send Rakhi to USA.

Elina Chatterjee said...

Gifts are the unseen threads that will tighten the grip of your relations specially that of flowers. SingaporeFlowersDirect.com is an online florist that comes with wide varieties of flowers. Send flowers to Singapore online through the online services of www.singaporeflowersdirect.com connecting you with Singapore.

Khalid Bashir Bashir said...

Great Blog, Check this one also

Reyazul Masud Riham said...

Thank you for sharing this with us. Welcome to The ultimate site
besttiramisurecipe.weebly.com
best tiramisu recipe
poultry business plan
poultryfarmingbusinessplan.weebly.com to get a customized poultry farming business plan

Harshit Raj said...

They stay away from their own friends caused by several negative conditions or perhaps caused by weighty workload and therefore are not really being able to retain their own contact and also commitments. Send Flowers to Mumbai Working on the essential relevance involving marriage in our lives in order to help make ones contact better, the net buying websites will give you whole lot involving options. They comprehend ones thoughts and also problems and therefore that they will be ready to assist you to when and also it's simple to easily send ones wishes to everyone moving into virtually any place of the world from the online websites. You possibly can send plants to Hamilton, when you choose.
www.eflowerstoindia.net/flowers-to-mumbai.html

" This blog is managed by The Sunday Indian. We heartily welcome comments on the articles.. However TSI will delete all those comments which are personal in nature and have the usage of unparliamentary language. "