India has dominantly being doing economically well; outdoing many of her economic counterparts placed under one economic category. This good trend has been impacted by reduced oil and their products prices which has indeed stabilized the public finances if India there by reducing their vulnerability immensely. The year 2017 is however displaying different patterns where the economic trends are exhibiting the opposite directions according to many economic experts. More so, long time corporate leverages caused by influential personnel to making unviable economic measures has come back hitting hard on the economy.
Strange enough, India has accumulated a lot of past bad debts which are still unsettled and are making the corporate friends who lend the money be cautious over the pending debts. Also, India is seemingly taking long to recover from its capital expenditure while the finance ministers have not shown any viable efforts that fast track the initiated projects that are supposed to stir-up robust economic growth. Worse still, the recent demonetization where all the 500 and 1000 Indian rupee notes were banned for any transactions has continued to aggravate both market and purchasing powers whose the impacts are now apparent.
It is even estimated that the previous IMF estimate of India growth in 2016 to be 6.6% might not be realized since the GDP used in predicting this growth was an overestimation and can thus the percentage growth is expected to be much lower. India’s growth is being encumbered by both public borrowing as well as the burden of meeting too many bad debts. It is remembered that India economy has been thriving more than her counterparts; a growth sparked by the far end of UPA regime and smooth fairing during the NDA period which saw the prices of oil and it commodities prices fall sharply making India control her twin deficits.
These proceedings have made India the preferred market destination as compared to commodity exporting emerging markets. This has encouraged more foreign investment inflows natured by falling import bill that helped India increase its imports cover ratio. Nevertheless, the kind price of oil has taken the opposite trend where the price of a barrel in 2017 rose to$70, high enough to raise India’s fiscal deficit by 0.4% of GDP in the course of the year. Now it has become hard to contain inflation as well as reduce price rates without affecting other sectors of the economy which is bow making India’s market less attractive.
But the many debts to banks and other corporations are the biggest setbacks that the economy of India is facing. The efforts to settle this debt while still ensuing growth is becoming far from reach. Much as the current government is trying to set forth infrastructure that stimulates growth, India will have to suffer the misgiving legacy of the past governments and the central bank that is seeing the rise in non-performing assets. Whilst the debts are settled, it will take time before the capital expenditure is revived.