Economy of India in 2011
Economy of India in 2011 has seen a lot of ups and downs. The second half of the year was mainly about downs. Indian economy in 2011 came to a slow down which rose many questions related to the fundamentals, governance and reforms. In fact, not just India, entire world has been going through a tizzy in 2011. 2011 as year looks like a year of economical slow downs, job losses and news of companies filing bankruptcy.
Economy of India cannot be looked in isolation from rest of the world, but 2011 proved to be more testing than 2008. There were questions raised regarding the ability of India to maintain its growth rate which fell sharply in 2011. The problems in the other parts of the world are related to economical policies, regulation etc but in India, they create a different genre of debate and that is issues are related governance, inability of state to reformative actions and gross mismanagement of resources.
2011 has been the year of extremely high level of inflation. Inflation across segments has been way ahead and government along with Reserve Bank of India had failed to bring it down. There are many factors which contribute to it and some of them are global factors where there is nothing much which can be done by them. But other domestic factors like corruption and wasting of huge amount of food grains can be controlled.
If all other factors remain constant and only these two things can be controlled, there will be a huge difference in the way things are currently placed. Inflation related to food will come down heavily if we can prevent its wastage. Reserve bank of India has been hiking interest rates quite often which had shown its impact on growth in 2011. IIP figures throughout the year were not impressive at ll. RBI in its recent statement said that “The growth outlook has weakened……..Inflation and expectations of inflation remain high. Upside risks emanate from exchange rate pass-through, revisions in administered prices and higher-than-expected government revenue spending,”
Blaming any single organization or government won’t yield any results as these problems have existed for long time in India but corrective measures should be taken to ensure that at least domestic factors contributing to inflation are checked. It’s just not corruption; it’s also insensitivity and lack of decision making ability which is making country pay for high inflation. Reformative steps like FDI in retail have not managed to go through the clearance process; this bill alone can significantly change the picture if not completely resolve the issue.
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