While the world was watching the wrangling between Democrats and Republicans over raising the U.S. debt ceiling, India has been going through its own debt crisis, which has brought major pressure upon the country’s various regions.
Experts note that the problem within India is eerily close to those which have affected other emerging economies within the world, namely from having an overheated economic situation which expanded very quickly just at the time economies in the rest of the world slowed down or stagnated.
According to a recent Guardian article, the rupee has currently slipped to an all-time low, a factor which can put the entire Indian economy in peril of collapse. And because the Indian government has made concessions to the situation in a piecemeal manner, a complete crash seems to many quite inevitable.
People are worried as well as critical, which much of the criticism lying with those close to the issue not realizing the historical value of other countries who have gone through the same sort of crisis, namely China and long before that, Japan. Signs of worldwide economic slowdowns were ignored while India continued to build and build.
Lately, with output growth decelerating and private investment falling for at least 10 consecutive quarters, industrial production and inflation have passed each other to go opposite directions with work going down while across-the-board prices have risen.
Partial blame for this scenario lands on the shoulders of not just Indian exports falling off, but imports increasing to unsustainable levels. Imports, in fact, that are nonessential to the country, such as gold, which has been financed by short-term capital that in large part has left the country, leaving India with items it can’t pay for.
Experts point to an Indian economic boom that was askew from the start in which its economy was debt driven but financed with short-term capital. A sort of catch as catch can attitude drove the Indian economy, the investors of which have now abandoned the country to its own issues.
A second and even more alarming consequence of the so-called boom was it benefitted few and not the masses. Social issues and improvements were not made among the Indian classes en mass. Only the very wealthy and powerful capitalized on the economic boom. Nutrition, health, sanitation and education seemed to not correlate with the new-found wealth within India.
Of course, some wiser individuals did see the looming crisis, but as often is the case within rising economies, those who issued warnings were ignored in lieu of continued delight and joy over a country that had finally made the mark along with other great economic powers.
But the problem, however seems to lie with how India didn’t fend for its own. In short, it allowed investors to come in with their cash, establish themselves with their interests and companies, and pay off those who in turn, paid no attention to the country’s internal ailments such as production slowdowns.
This made for political instability in some cases as well as economic instability. In other cases, a good amount of Indians blame Ben Bernanke and the U.S. Federal Reserve for India’s woes. As Bernanke continually threatened to stop the U.S. Government’s bond-buy program, to do so directly affected the Indian economy simply because the influx of U.S. dollars would therefore come to an end. To do this would have pressured the wealthiest in India last, while the working poor would be the first to come under such a toll.
Granted, this has been a hard lesson for India, and one it will soon not forget. India might possibly rebound, but as of now, the gloom and doom seems continues to increase across the board, from those who prospered and others who never was part of the good times the country previously enjoyed.
Author bio: Dave Landry Jr. is a personal finance manager and businessman, working in part with agencies that specialize in debt management to assist in bankruptcy crises and debt management. Landry Jr. has never traveled to India but is highly fascinated by the country’s beauty and culture and hopes to have the great fortune of visiting one day.
Dave Landry Jr. is a personal finance manager and businessman, working in part with National Debt Relief to assist in bankruptcy crises and debt management. Mr. Landry has never traveled to the great nation of India but is highly fascinated by the country’s beauty and culture and hopes to have the great fortune of visiting one day.