India heading towards worst economic crisis: Experts
Say falling rupee, massive scams, policy paralysis slow down economy
Srinagar, June 4: The sharp drop in rupee against dollar has triggered concern among the experts who say its continued fall could pose some major challenges to the Indian economy in near future.
According to experts, the fall in the rupee has bloated the size of oil import bill for India forcing the government to hike the petrol prices by a steep Rs 7.54 per litre on May 23; the prices were reduced by Rs 2 after some days.
Curiously, the hike created ripples across the country and evoked wide condemnation.
Experts said if the fall in the rupee continues, there could be many more price hikes of petrol in the immediate future. “Even the government could go for decontrol of diesel, LPG and kerosene,” they said.
“Increase in the prices of petrol is due to the appreciation of dollar against rupee,” Prof Nisar Ali, economist said.
“We have to pay for crude oil in dollars and increase in value of dollars automatically makes the oil dearer,” Prof Ali said.
Prof Ali likened the increase in oil import bill with ‘imported inflation.’
Shakeel Qalander, industrialist blamed central government for the hike in petrol prices and depreciating rupee.
“This is the result of the bad policies of the centre government,” he said, adding that such an economic scenario has “shaken the confidence of investors in the country.”
Qalander said: “The petrol hike may not have the hard hitting impact on other segments of economy, but if rupee continues its free fall it will force the government to withdraw subsidies on diesel, kerosene and LPG to arrest the rupee slide. The imminent price hike in these items will result in high inflation and steep interest rates.”
“Any short term intervention by the government is unlikely to stop the slide of rupee,” Qalandar said.
Qalandar asserted that the way forward to have stronger currency depends on making fundamental improvements in the system to attract foreign and domestic investments,” Qalander, former President Federation of Chamber of Industries Kashmir said.
Qalandar made a strong pitch for reduction of sales taxes on petrol by the state government “to give relief to the common people.”
According to experts, India was not largely affected by the global recession and financial crisis of 2008. “Even after global financial crisis, India looked set to chase high returns through foreign and domestic investments to sustain its pre-crisis growth at 9 per cent,” they said.
However mega scams including 3G together with rising interest rates, high inflation and policy paralysis on the part of the government, broke the investor confidence and shattered India’s growth dreams.
Experts said that the reason behind low investment could only be attributed to the volatile economic environment that doesn’t inspire confidence in global and domestic investors to put their money in the Indian market.
“Both the foreign and domestic investors are pulling out of Indian market to put their money elsewhere,” experts said.
To mention, the situation on the foreign trade front has also worsened and India is facing huge current account deficit and fiscal deficit.
“The imports of crude oil, gold, steel and other items have always outpaced exports resulting in widening the trade gap which was $ 184.9 billion in the last fiscal year. On the contrary, the Indian goods are facing stiff competition in the international market leading to lowering of their demand,” experts said.
“In any case India is heading towards worst kind of crises on the economic front in immediate future that has the potential to have its impact on politics as well,” experts said.
Lastupdate on : Mon, 4 Jun 2012 21:30:00 Makkah time
Lastupdate on : Mon, 4 Jun 2012 18:30:00 GMT
Lastupdate on : Tue, 5 Jun 2012 00:00:00 IST
- MORE FROM BUSINESS
- India heading towards worst economic crisis: Experts
- Businessman sentenced to 6 months in prison
- EDB holds Kissan Mela
- ‘Govt took several steps to harness energy’
- Satya College kicks off admission campaign
- As tourists throng Sonamarg, hill resort eyes 6 camping sites
- Country’s sophisticated Fish Feed Mill to come up at Mansbal
- Bandsaw, plywood mill owners raise issues with Mian Altaf
- Indo-Pak trade bodies sign pact
Geelani For Promotion Of Urdu Literature; Mirwaiz, Yasin Urge Youth To Develop Reading Habit
Srinagar, June 4: The National Book Trust of India (NBT) Book Fair at SP College here Monday saw some high-profile customers: Hurriyat Conference (G) Chairman Syed Ali Geelani, Hurriyat Conference (M) More
- Srinagar City
Seeks gear-up in sterilization, echoes sanitation mantra
GK NEWS NETWORK
Srinagar, June 4: Finally, the state’s top bureaucrat -Chief Secretary, Madhav Lal on Monday spoke about the dog menace at a high level meeting even as he sought a gear up in the ongoing canine sterilization More
AMARNATH YATRA DURATION ROW
JAMMU, JUNE 4: Around 150 Vishva Hindu Parishad (VHP) activists and senior BJP leaders including party Member Parliament (MP), Tarun Vijay Monday courted arrest after they were prevented from proceeding More
Damascus, June 4: Syrian government troops fought deadly battles with armed rebels today as the European Union pushed for an end to a split with Russia over how to end the 15-month bloodshed. In talks More
Toilets constructed on banks; people dump garbage everyday
Qaimoh, June 4: The inhabitants of Qaimoh are up in arms against the state government for its failure to check the rampant encroachments and pollution in the Vaishaw Nallah. The stream is being encroached More