I praise RBI Governor Mr. R. Rajan for understanding and accepting the bitter truth of economy facing the critical crisis of inflation, fall in value of Indian rupee, rise in current account deficit etc( News item given below ). Though late, RBI Governor has rightly attributed the dose of stimulus package given to economy after 208 crisis of USA and held responsible for present pathetic condition of India and economic problems of India . It is really the stimulus package which has over heated the economy and caused so many problems and which can be solved only by immediate or by tactful or by slow and gradual withdrawal of the same .
I salute Governor Mr. Rajan for publicly telling the country that only one third of reasons causing present economic problems is global recession but major cause behind current economic crisis are nothing but overdose of stimulus package given by the then Finance Minister in 2008 09 and allowed to continue till date by current Finance Minister to please and to win the good will of rich class without caring for the consequences.
I personally have been writing for last three years and more that the way our learned the then FM and present PM treated the economy and the way they gave liberty to business class in the name of reformation of in the name of synchronization and integration with global economy, these learned economists will pave the way of economic disaster for India and open the gate of high profitability and consequent price rise and inflation. This has happened during last five years. And the most unfortunate and the most painful face of the day is that the current government led by team of experts in finance is still treating the cause of problems as solution of all problems.
This is the wrong policy of the government that price of land and houses have gone by ten times upto hundred times and more in last few years. This is due to wrong polices that common men are not in a position to dream of a good house. It is due to their bad policies that prices of basic ingredients for building houses like coal, sand, cement iron, power, fuel etc has gone up too much. Due to this abnormal rise in basic goods, cost of all industrial goods and other products, transportation and all essential goods has sharply gone up. Not only this even education and essential food grains have gone beyond the reach and affordability of poor and middle class people of the country. It is only few rich who have become billionaire in few years.
I therefore without any hesitation say that the current government and majority of finance experts ruling the government are simply and fraudulently cheating common mass and playing foul game with poor persons. They are giving all benefits and all favour to rich class only for the sake of their political advantage. Government failed to stop corruption, hoarding, profit making and all relevant and associated anti-poor activities of rich which are most important to be monitored whenever total freedom is given to business community.
Freedom without regulation or with the malicious intention of making money for political survival and personal wealth have so far remained the real causes behind price rise and inflation . Government shed crocodile tears on pain of poor and seeks votes from poor but after victory these politicians sell government funds for personal gain at the cost of poor. These corrupt politicians will be removed only by person like Arvind Kejriwal or Mr. Narendra Modi.
Current government at center simply talk of MANREGA or Food security Bill or right to information but have in fact done nothing to provide food and water to all during last six decades of rule. They may blame opponents in political circle for all their failures, they may use the mantra of secularism to appease one community of the other or they may blame global recession for crisis in banks to save their men in banking industry or they may blame CAG and CBI to save their business friends, but voters of this country cannot be cheated for long and they have taught a good lesson to current rules in just concluded election in four states.
I hope Congress Party will take a lesson from their past mistakes and do something for good in real sense and stop maligning opponents.
Rajan attributes current economic woes to domestic factors-Business Line 10.12.2013
Attributing the current economic woes to stimulus provided by the Government to tide over the global crisis of 2008, RBI Governor Raghuram Rajan has said it eventually led to an overheated economy, high inflation and uncomfortable fiscal and current account deficits.
Addressing investors at an Citibank event in New York, Rajan said economy has slowed to below 5 per cent from an average of 8 per cent between 2002-2012, mainly on account of domestic factors.
The slowdown is “largely a result of domestic factors (institutional weakness, withdrawal of stimulus) and one-third due to global factors,” Citi said in a release today quoting Rajan.
“While the stimulus did help growth initially, it eventually led to an over-heated economy, high inflation/wage growth and consequently deficits widening to uncomfortable highs“.
The then Finance Minister Pranab Mukherjee gave three stimulus packages to the industry to combat the impact of global financial meltdown of 2008.
The current account deficit (CAD), which is the difference between inflow and outflow of foreign exchange, rose to a record high of 4.8 per cent of GDP in 2012-13, from 2.8 per cent in 2010-11.
Following the measure taken by the Government and the RBI to increase inflow and restrict gold imports, the CAD moderated to 3.1 per cent of the GDP in first half of current fiscal. It was at 4.5 per cent in H1 of 2012-13.
"Efforts to rein in the CAD have worked with the deficit likely to come in at sub 3 per cent of GDP from 5 per cent last year," he said.
On a more long-term basis, Rajan hoped that inflation indexed bonds would help reduce gold demand.
Referring to fiscal deficit, he said the budget target of 4.8 per cent of GDP is likely to be met, “but could result in a contraction in spending, depending on the extent of revenue shortfall“.
The fiscal deficit stood at 4.9 per cent in 2012-13.
Rajan said there was a need to improve the financial system by clarifying monetary policy framework, strengthening the banking structure through new entry or bank expansion and broadening financial markets, among others.