Even if it sounds somewhat cruel, the current state of the Indian economy is pretty similar to the one of a sinking ship. The never-ending rupee fall is one of the most significant signs of an economy that is simply going down. Both – local and foreign experts are skeptical about the rupee bottom price, as well as about the Indian government’s incapability to restore confidence among the foreign investors.
The Finance Minister and the Prime Minister – all together they exert every effort in order to prevent the economy from going from bad to even worse. So, what are the biggest threats that India’s economy is faced with and that need to be worked out?
Credible Fiscal Policy
The increasing fiscal deficit that is caused by the disbalance between the government’s expenditure and revenue is a serious threat. The figure of the fiscal deficit has shot up from the level of 3,5% in 2008 to 5,8% in 2012. Experts recommend that all wages and subsidies expenditures must be minimized as well as directed at heath care, education and infrastructure fields.
Providing a Great Number of People with Food
In case the Food Security Bill is out there in the country, it will definitely add to the problem of exchequer. According to it, the government of India is going to provide a bunch of people with grains that are purchased at the sky high prices set within the market. Even though the government representatives try really hard to bring down the percent of the fiscal deficit, sticking to the current plan it all looks like a dream that is not going to become reality.
Low % of Skilled Population
Even though more than 13 billion people join the workforce of the country every year, 20% of them can boast of having some good skills. Highly proficient individuals are required to create new business segments that help to develop India. The government of the country has to take a range of measures in order to educate people and finally turn them into experienced and qualified segments of economy.
Black Money and Fraud
There’s a well-known fact that foreign banks have lots of black money coming from India. The sad fact about it is that it costs really a lot to the Indian economy. The specialists of the Global Financial Integrity have stated that at the moment India is at the eighth position among the world nations to deal with the most illegal finances. All the funds that are considered black money act like the aspect that weakens the whole segment of Indian economy. Some of the banks that represent the large international private sector do not even try to work in accordance with the range of regulations and restrictions set by the central banks. What is more, they cash in huge sums of black money in various assets like gold. This in turn has an enormous effect on the economy of the country.