Friday, August 16, 2013

GOVERNMENT-INDIA DOWNGRADED-SLOWDOWN CREATED

Whenever the Indian industry grows depending on couple of sectors immediately the government’s attention gets into the sector and slows down the growth. This practice has now lead Indian economy to grow below 5%.In between whatever steps or actions the government proposes to take all remains vain since government has already damaged the system beyond any means. When the telecom industry was growing the government placed a higher rate for the 3g auction price which resulted to drop in significant market for the 3g. Telecom was able to attract FDI investments and even domestic investments were sufficient enough to provide a back up to the current phase of the economy. But government was more inclined to reduce the CAD through higher auction prices. Government failed to recognize that when FDI investments and such a huge growth was coming from the telecom industry generating employment and other ancillary market growth was sufficient to reduce the CAD and increase the growth of the Indian economy.


They repeated the same story for the Indian oil and gas sector where huge investments and overseas capital was flowing into the sector the government banged the heads of the exploration companies with their complicated policy frame work and pricing strategies. India is the sixth largest consumer of oil in the world and the ninth largest crude oil importer. India’s oil and gas sector contributes over 15% to the Gross Domestic Product (GDP). According to Ministry of Petroleum and Natural Gas, India has a total reserve of 1201 million metric tonnes of crude oil and 1437 billion cubic metres of natural gas as on 01 April 2010. The total number of exploratory and development wells and metreage drilled in onshore and offshore areas during 2009-2010 time frame was 428 and 1019 thousand metres respectively. These data’s are old but I have provided them to make you understand about the growth the sector was getting and the projected growth it might have achieved. Our daily newspapers are sufficient enough to portray the growth of the industry we might have achieved.


For mining industry the government imposed a similar red tape policies which has damaged the thousand s of households income who use to earn from the segment of daily basis. It also lead to huge amount of import of raw materials for various industries who were dependent on the mining industry.  This also lead to a huge notional loss since giants like  Posco and Arcelor-Mittal went out of the indian markets before a single penny could get invested. When the Indian pharma industry started enjoying the flavors of huge growth then suddenly the government came up with new drug pricing policy.

In the automobile space we find that when SUV and other FDI companies opened up their shops and started doing huge investments suddenly the government came up with hike in duties on SUV and other segments. Now the same automobile industry is reeling under negative growth followed with job cuts and freeze of employment. In infrastructure segment particularly in the road project segment the government red tape policies and delayed project completion mixed with huge political exploitation the sector is now being avoided by the private investments.

When the SEZ segment across industry was finding its growth then suddenly the government came up with taxes and duties to impose over the sector. Ramification of the entire hike of duties is that SEZ licenses started getting surrendered by the Indian companies.

Its being found that where ever there is an growth for the industry the government comes up with its hard policies which affects the growth not only of the industry buy also employment generation and other ancillary industry. All the above information might be old but holds a significant aspect behind the slowdown of the Indian economy. My prime reason for writing the article was to highlight where the system is lagging and how the defects can be rectified. I did not mention any solution for the problems since I have kept the solution for you to provide. GDP growth slowdown is not for poor overseas market. Its mainly due to the domestic reasons and policy strategies for the current government.

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