The Distressed Economy

India was the economic discovery of the new millenium. Brilliant growth rate, shining corporate sector and promising reforms; all made India a wonder economy- an economy that bypassed the traditional growth path and outwitted all development economists by emerging as a service oriented economy without shading away the dependence on agriculture or strenghtening industries. However, since the advent of recessionary situation on global economic forefront the structural defects in Indian economy are showing up. Indian economy that was once all set to achieve the 11th plan target of 10% GDP growth rate had to be satisfied with 8% growth rate for the plan period. Even for the 12th plan we have targeted a growth rate of 9% only.

All this because of two major failures- 1st is the inability to shed excessive dependence on agricuture. It still provides livelihood to more than 60% of population and hence is a major determinant of consumption spending. This is one of the reasons why growth rate shrinks the moment agricuture seems in turmoil. Second reason is our inability to carry out mass industrialization so that more and more population can be provided livelihood through this. Agriculture needs a no. of structural changes ranging from land reforms to shift in cultivation pattern and only then can be the inflation that is hurting India's promising prospect be tamed. Industry on the other hand requires a no. of policy changes for growth stimulation. In this matter the political leadership in India has failed to continue with the promising reforms it started in 1990s. Land acquisition, power reformsone stage clearance, freedom from complex procedural hinderances, labour reforms all are being awaited to see industries grow.

India at the moment is showing dismal scenario because of policy paralysis. Investor sentiments are very low and corporate sector has slowed investment decisions to cope with the uncertain policy scenarios. However, with the amount of resources both natural and human the economy has brilliant prospects for growth and its only a matter of time before the policy changes will get going and start making impact on the economy. So, its not wise to dismiss India's growth prospects or the position India has gained in the world economic order. Although it is true that at the moment the economy is distressed but, considering the impacts of global uncertainity we can give the country some point for not being in turmoil and handling the recession well.