Indian Economy looking for New Direction (FRESH INDUCTION – FRESH OUTLOOK – FRESH HOPES)

The Indian Economy is posing newer and fresh challenges every day. In the economic scenario, more
particularly on the front of current account deficit (adverse balance of payments), substantial devaluation of Rupee in terms of foreign exchange rates and substantial reduction in growth rate of industrial and service sector are areas of major concern. Stalled infrastructure projects, under utilization of available human capital, lapses in legal provisions, rising inflation and consequent financial crunch are collectively hampering the growth of the economy in the desired manner.

The Government has recently finalised the appointment of Mr. Raghuram Rajan, former IMF chief economist and chief economic advisor in the finance ministry as the new Governor of the Reserve Bank of India. Mr. Rajan is a well known economist and has been playing a key role in the economic strategy and policy of Government of India in the recent past. Mr. Rajan is very famous having predicted the US economic crisis well in advance, when the other economists in USA defied any likelihood of such crisis happening.
A well renowned economist with an excellent academic and professional background is now going to be at the helm of the economic and financial regulation and the Indian economy has major expectations from him -

• To control current account deficit by bringing in such policies that increase inflows of foreign exchange substantially and can reduce the outflows.
• To provide adequate liquidity to the financial sector, industry, infrastructure, service sector and other important organs of the economy in order to enable them to have adequate resources at a very reasonable cost. The rate of interest and availability of credit are both important areas to be addressed with a fresh thinking.
• The growth rate of infrastructure sector, industry as well as service sector has suffered severely due to sluggish decision making, uncertainty arising out of excessive charges of corruption and resultant lack of will on the part of bureaucrats and politicians to take the right decision at right time. This area can be only partly addressed by the Reserve Bank of India and has to be mainly addressed by our political leaders.
• To curb import of gold and other consumer items, which are not really required to be imported? This has to be achieved in a strategic manner in view of WTO commitment.
• The financial sector is also expecting larger and deeper reforms. The availability of all latest financial products as well as availability of reasonable cost credit are very important to bring inclusive growth and more particularly the growth of agriculture sector, rural sector, Tribal, hand workers, small and medium enterprises has to be planned, incentivised and implemented in the economy.
• The role of new private sector banks, to be licensed by Reserve Bank of India could be the crucial in implementing the vision of the Government. The national and international reach of the Indian banking sector can be achieved only with growth of existing players in the financial sector and incubating new private sector banks as well as public financial institutions to meet the increasing requirement of channelizing the savings of the Indian economy to highly productive uses, is possible only by the deep routed, highly efficient and effective financial sector framework, institutions and banks.