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    Indian Economy's Strengths & Weaknesses-VRK100-01Sep2013

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    RamaKrishna Vadlamudi, CFA
    The document summarizes India's economic strengths and weaknesses. The key strengths include a good monsoon boosting rural economies, foreign exchange reserves, and potential for higher exports. However, weaknesses include a loss of confidence in India's ability to address economic problems, a falling rupee reflecting lack of reforms, high fiscal and current account deficits, and lack of strong political leadership to implement economic reforms. To conclude, while India has strengths, it faces many economic challenges that are overwhelming these strengths unless political leadership enacts sound fiscal and monetary policies.

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    Indian Economy's Strengths & Weaknesses-VRK100-01Sep2013

    Uploaded by

    RamaKrishna Vadlamudi, CFA
    116 views2 pages
    The document summarizes India's economic strengths and weaknesses. The key strengths include a good monsoon boosting rural economies, foreign exchange reserves, and potential for higher exports. However, weaknesses include a loss of confidence in India's ability to address economic problems, a falling rupee reflecting lack of reforms, high fiscal and current account deficits, and lack of strong political leadership to implement economic reforms. To conclude, while India has strengths, it faces many economic challenges that are overwhelming these strengths unless political leadership enacts sound fiscal and monetary policies.

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    RamaKrishna Vadlamudi details Indian Economy's Strengths and Weaknesses.

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    The document summarizes India's economic strengths and weaknesses. The key strengths include a good monsoon boosting rural economies, foreign exchange reserves, and potential for higher exports. However, weaknesses include a loss of confidence in India's ability to address economic problems, a falling rupee reflecting lack of reforms, high fiscal and current account deficits, and lack of strong political leadership to implement economic reforms. To conclude, while India has strengths, it faces many economic challenges that are overwhelming these strengths unless political leadership enacts sound fiscal and monetary policies.

    Copyright:

    Attribution Non-Commercial No-Derivs (BY-NC-ND)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    116 views2 pages

    Indian Economy's Strengths & Weaknesses-VRK100-01Sep2013

    Uploaded by

    RamaKrishna Vadlamudi, CFA
    The document summarizes India's economic strengths and weaknesses. The key strengths include a good monsoon boosting rural economies, foreign exchange reserves, and potential for higher exports. However, weaknesses include a loss of confidence in India's ability to address economic problems, a falling rupee reflecting lack of reforms, high fiscal and current account deficits, and lack of strong political leadership to implement economic reforms. To conclude, while India has strengths, it faces many economic challenges that are overwhelming these strengths unless political leadership enacts sound fiscal and monetary policies.

    Copyright:

    Attribution Non-Commercial No-Derivs (BY-NC-ND)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    RamaKrishna Vadlamudi, HYDERABAD

    01 Sep 2013

    www.ramakrishnavadlamudi.blogspot.com
    Strength is weakness, said George Orwell

    The Strengths are:


    The South-West Monsoon has been good this year providing boost to rural economy and may bring down pressure on food prices Foreign exchange reserves at $278 billion are sufficient to cover about six months of imports Steep fall in rupee may help Indias manufacturing sector with potential for higher exports provided Indian products are priced competitively abroad Growing wealth effect: Spurred by rising gold and real estate prices, Indians wealth has gone substantially in the last decade, providing boost to domestic consumption though consumption growth rates may come down in future Savings rate is high at around 30 per cent though it has come down in the last three to four years (of course, the high savings rate is mainly due to the fact that common people have no social security) Indias population is very young providing good demographic benefits in the form of higher productivity and higher consumption of goods and services Poverty has declined substantially of late though we are plagued with malnutrition, lack of potable water & sanitation, and illiteracy The level of entrepreneurship has gone up substantially after liberalization India has vast natural resources, such as iron ore, coal, water and arable land Indias skills in export sectors like, software services, engineering goods, gems & jewellery and garments are well recognized across the world If implemented properly, Goods and Services Tax (GST) will boost tax revenues India has vast potential for tourismbe it medical, heritage or wildlife

    The weaknesses are:


    Loss of confidence in Indias ability to fix the economic problems and lack of strong political leadership Falling Indian rupee is reflecting lack of economic reforms since 2004, though the Government lowered subsidies on petrol and diesel to some extent Current account deficit has gone out of hand putting pressure on rupee

    Page 1 of 2

    Fiscal deficit is getting out of control as the government is unable to control expenditure (huge subsidies on food, fuel and fertilisers) for about six years Consumer Price Inflation remains very high at around 8 to 10 per cent for about five years, though wholesale price inflation is slightly on the mend Large price rise in food articles is affecting the poor people very adversely Retrospective tax amendmentsfor example, Vodafone tax dispute Indian bureaucrats are partially responsible for delayed actions on the ground Investors are concerned about controls on foreign capital outflows. In the last three months, foreign investors have taken out approximately $12 billion from Indian debt/equity markets, though many emerging markets have experienced flight of foreign capital. Indias national income growth has slowed down due to high interest rates, decline in investment cycle, lack of economic reforms and weak global outlook Indian corporates are burdened with high foreign as well as domestic debt Manufacturing sector is down due to: mining bans, delays in environmental clearances, land acquisition problems, social unrest and othersthe central government is unable to address these problems despite tall and hollow talks There is massive skills deficit across industries The central government is unable to push economic reforms as it is drowned in corruption scandals in the last three to four years. Unfortunately, corruption has permeated the entire social fabric. The micro challenges for India are: poor healthcare, lack of quality and basic education, malnutrition, hunger, poverty and illiteracy Hard infrastructure (roads, ports, power, broadband, etc) is very weak and energy security is poor. The present government has fully failed on this front. Low productivity is impeding farm output and the government has done precious little except raising procurement prices for food grains Focus of the Congress (I)-led UPA Government on vote-catching welfare schemes ignoring the ills of the economy completely The Indian Parliament is interested only in uproars, walkouts, and logjams To Sum Up: India is facing challenges with high fiscal and current account deficits, lack of strong political leadership, falling rupee, high inflation, slowdown in portfolio inflows which are overwhelming Indias strengths. Let us hope that good monsoon will bring cheer to rural economy and the political leadership will steer the economy on the right course with sound fiscal and monetary policies aimed at pushing India on the next wave of growth. May be, the 2014 elections will bring some clarity on this. --Disclaimer: The author is an investment analyst, equity investor and freelance writer. This writeup is for information purposes only and should not be taken as investment advice. Investors are advised to consult their financial adviser before making any investment decisions. He blogs at:

    http://ramakrishnavadlamudi.blogspot.in/
    Connect with him on twitter @vrk100

    Page 2 of 2

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