All is not well on the Economic front. The UPA 1 had blamed the Left Parties for not allowing them to spur the Reforms. The Left has been out of the Ruling Front for the past 2 years and the Government is spending lavishly on the social sector front while all the parts of the Economy are crying for help. It is almost like Nero fiddling while the Rome is burning.
The Prime Minister’s Economic Advisory Council (PMEAC) in its report released yesterday, has put a wonderful spin on the state of economy not backed by any strong data or fundamentals. It has predicted that India's GDP will grow at 6 1/2%. But this is based on the assumption that the North East monsoon will be normal and we will have a bumper Rabi crop, which is wishful thinking to say the least.The Council also assumes that manufacturing and services sector output will accelerate in growth which is extremely unlikely due to the credit squeeze and foreign loans are drying up for the manufacturing sector. What is worrying is that the central budget fiscal deficit has soared to 7% of GDP, double the level two years ago, and the Government is hardly doing anything to reduce the deficit.
The stimulus package announced by the Government envisages pumping in money into the economy. This is more likely to increase inflationary pressures while the economy suffers stagnation in demand. Though the WPI index shows the inflation at <>
The economy is in crisis, and the saddest part is that the Government, headed by the 'Economist' has absolutely no clue as to how to go about. All they can think of is pumping more RBI printed notes into the economy such as through NREGA which is siphoned off by the corrupt elements. This results in more black money being created that is sent abroad through hawala to re-cycle it back to the stock market via the Participatory Notes. This helps to artificially boost the equity market, where unscrupulous traders and Institutional investors make huge gains through manipulation of the SENSEX.
As long as the SENSEX booms, Government is happy. And damn the poor and the needy. They dont need them as the elections are more than 4 years away.
