Indian Economy - Victim of policy paralysis or international market?

Is our economy a victim of policy paralysis or international market conditions?

The Finance Minister of India on 17 February 2014 presented the interim budget of India and he refuted the argument of policy paralysis.

In fact, he cried foul over the international market situations and held them responsible for the current situation of economy. He mentioned that his government took every step possible to recover the Indian economy.

But whether these arguments hold truth or not, let’s find out:-

Economy a victim of policy paralysis
1. Over the past 10 years the manufacturing sector of India has shown no signs of growth and all because of the lack of decision making and rampant corruption in the government.

2. The exports are very few as compared to the imports made and government has failed to handle the situation. This has led to a widening CAD and fiscal deficit which further weakens the rupee.

3. Food grains which are an asset to our production sector are not stored properly. Last year itself, tones of wheat and potato was wasted due to lack of storage facility. Such situations occur not because of global economic activities; but because of policy paralysis.

4. A very recent example will be of the set top boxes. After digitization all over the country, the set top boxes were required for cable connections and they were imported from china. Such boxes, if manufactured in India, could have increased revenue of government and also generated employment. But lack of policy making did not allow it.

5. Inflation and devaluation of rupee is also led by fishy economic agendas and corruption stricken economy.

6. Export of onions to gulf nations, further increasing the food inflation is other example of policy vacuum.

No, it is a victim of global scenario
1. The devaluation of rupee was due to the U.S. quantitative easing tapering plan by Federal Reserve. All over the world, global economies suffered because of it.

2. Government introduced FDI, land acquisition bill, delayed GAAR, laid the founding stone of GST and did all it could to soothe the economy, but global economical conditions were not in its favour.

3. Heavy import of gold was a solid reason for widening CAD which was properly handled when govt. increased the excise duty to import gold. So, the argument of policy paralysis holds no metal.

4. Many economies like that of Greece or Spain were completely devastated with the global crisis. Ours faced it and was the least affected because of the strong credit policies of government.

5. This was a tumultuous face for global markets, and fast growing economies like China an Japan also witnessed a decline in growth rate.

Conclusion
The situation of Indian economy is very precarious and no one can deny that. There have been certain major faults on the level of policy making and implementation.

But the other fact is that, seeing the state of global economy, the government does not have much scope to improve the troubling economics of India. And a healthy recovery of it is expected in the coming days.