Mr. Khandelwal stressed the need to introspect why we rank so low on indices like the Economic Freedom Index (111/144) or Global Competitive Index (59/144) and why we keep slipping in these rankings. Lowest value of Indian currency, growing unemployment @10.2% in last two years and absence of any sustainable policy to encourage domestic production and failure to boost exports is yet another cause for the debacle of economy-said Khandelwal.
India’s macro-economic stability has been under a cloud for some time but the economy is currently on the brink of a deep crisis. According to the RBI First Quarter Review 2013-14, economic growth stood at 5% (2012-13, RBI); the rupee has been depreciating continuously to an all time low of Rs 61.79 to a dollar (16th August, 2013); the foreign reserve situation has been dwindling; current account deficit (at 4.8% of GDP by 2012-13-provisional estimates, 6.5% in Q3 2013-14) and trade deficit (at 190.9 billion USD in 2012-13) almost triggering a critical Balance of Payments (BOP) situation; inflation rate stood at 7.4% in 2012-13; and most other macro-economic indicators are going downhill.
Industry bodies and mainstream economists have been crying for “more reform” ascribing all blame for this degenerating macro situation to not doing enough liberalization and under their influence, the Government is taking regular steps to please them without caring repercussions on domestic trade and commerce and we are witnessing the results-said both trade leaders.
Mr. Bhartia and Mr. Khandelwal said that interestingly, India has focused more on the external sector as far as reforms go while domestic sector policies such as tax reforms and development sector reforms are lagging way behind. Rapid liberalization has exposed India to the volatile global markets in commodities and finance and subjected the economy to the risks of contagion to the various manifestations of the global crisis. For example according to the RBI’s recently released First Quarter Review 2013-14, the recent crisis in CAD to capital outflows from EMDEs. The Report also points out how the accentuated the global bond sell off made markets jittery “leading to significant volatility in bonds, currencies, commodities and equities in EMDEs. Contagion from markets across Asia spilled over to India”.
Mr. Gopa Kumar, Convenor of Forum against FTAs said that India has also been zealously pursuing trade liberalization, in particular, signing and negotiating about 30 bilateral trade and investment agreements (FTAs) in order to increase “trade”. However, India still faces a significant trade deficit both in global trade as well as with most of its FTA partners and the vigorous pursuit of its FTA policy is getting to be a matter of concern, not only to CSOS for their development implications but even for the industry and export bodies, Farmers associations have also protested against the negative impacts expected from India’s FTAs, especially with developed countries. While oil accounts for a necessary 1/3 rd of India’s imports, its burgeoning deficit even in other areas of trade has imposed the burden the adjustment on the financial flows in the current and capital account.
The CAIT in association with other groups and organizations of retail sector will be convening an " Economist Round Table Conference" shortly at New Delhi to discuss the fall out of Indian economy and to draw charter of remedial measures to check the economic fall out.