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Indian Economy (88)

The Indian economy seems to be caught in an unending downward spiral. All three sectors — Agriculture, industry and services — of the economy are facing significant headwinds.

Given this paradigm let us explore ten steps in retrieving the Indian economy.

Indian economy comes to a fullstop

A fairly large South-Indian group with varied business interests had invited me to a strategy session to turn it around. It was the first meeting and was to be preceded by breakfast. As we waited to be served, I perused their latest balance sheet.

Noticing that it was a profitable, tax and dividend paying company, where was the question of turnaround I wondered? Nevertheless, I instantly zeroed in on the balance sheet. I observed that the company had invested approximately Rs 700 crore on its subsidiaries and lent another Rs 300 crore — in the aggregate Rs 1,000 crore. Flipping across the accounts, I asked a simple question – what is the return from this investment of Rs 1,000 crore? (Amounts changed for obvious reasons.) 

Decline and fall of the Rupee

This must stun most. Our trade deficit with China for 2012-13 is expected to be in excess of $40 billion. Remember, we do not import either gold or crude from China. Nor do we import arms or hi-tech products. Apparently, the import deficit with China is reflective of all that is wrong with Indian economy. Welcome to India under UPA!

But what do we import from China so as to run such gargantuan trade deficits? Nothing big or spectacular. What is galling is that most of these items could be manufactured or produced in India. Yet we import.

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