As the tenure of the UPA II is reaching the end, no matter whatever crisis the Indian economy is in, Prime Minister Manmohan Singh still believes that it is just a rough phase. Speaking at a function on Friday, the Prime Minister assured to do everything to help the economy bounce back and then pronounced the economy to be fundamentally strong.
Just a few months earlier, The Pioneer had analysed how strong the fundamentals of the economy really are. The Prime Minister claimed that the critics are focused only on one year of bad performance. He added, “This makes good for television but it is a very distorted picture.”
The Government has been talking about a fundamentally strong economy but as it turns out in the last 4 years, the very fundamentals are getting worse.
India’s Gross Domestic Product (GDP) growth rate in FY10 was 7.2 per cent and in FY14, the Government is hopeful to at least touch the 5 per cent mark. The same falling trend can be seen in the IIP numbers which fell from 10.5 per cent in FY10 to 3.5 per cent in FY13.
Inflation front, the Wholescale Price Index (WPI) rose from 1.6 per cent in FY10 to 7.6 per cent in FY13. Another important factor which has been one of the biggest concerns in the recent days is the Rupee-Dollar exchange rate. The RBI and the Government has been doing everything they could to stop rupee from falling. Back in FY10 exchange rate was Rs 44.5 per dollar which now in FY13 is hovering around Rs 60 per dollar. As far as country’s forex reserve goes, in December 2009, India’s total forex reserve stood at $283.5 billion and now in July 2013 it is at $280.167 billion. So neither the Government was able to prevent rupee from becoming the weakest currency in Asia nor was the Government able to either build up country’s forex reserve.
Till now, all the fundamentals of economy are weaker than what they were in FY10. Fuel is another important factor, which cannot only disturb common man’s budget but can also have major impacts on entire economy. When UPA II came in power, petrol prices were around Rs 40.5 per liter levels but now in FY13, in Delhi at least the prices have soared above Rs 70 per liter.
The situation of the country’s current Account Deficit (CAD) is no better as well. Back in FY10, country’s CAD was 2.8 per cent of the GDP which touched 4.8 per cent of GDP in the previous fiscal year which ended in March. As it turns out, fundamentally strong economy is just a rosy picture, in realty the nation is growing weaker as the years go by.