23/11/2015
Current economic situation in India
The domestic economic situation is not a pretty picture: there is no growth recovery in sight even as consumer price inflation continues to hover around double digits. So there is little room for a stimulus to economic activity right now.
A monetary stimulus will be risky at a time when the Reserve Bank of India (RBI) has to douse the inflationary fires that were left unattended for too long.
Temporary fall in prices is not deflation and it is the sustained fall for a considerably long period of time which is a matter of serious concern. It causes the aggregate demand to fall, as due to the falling prices the consumers try to delay the purchases, which in turn reduces economic activity in the economy, thereby accentuating the spiral effect of deflation. The result is that the existing manufacturing capacity of the economy becomes idle, leading to further reduction in aggregate demand and even more reduction in economic activity. If the process continues without any interventions from the government, the economies may move in to a situation of recession. So pls right now invest in save instruments, try to invest in fixed long term return products because in future bank interest will become zero.
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