Thursday, May 31, 2012

GDP falls to the lowest ever

What went wrong? Why is the situation so bad? Who is to be blamed?
The fiscal deficit was growing. The government was spending much too much than earning. But the currency notes were getting printed. Everyone were getting salaries. No concrete efforts made to control the deficit.
Because the amount of money with public were more imports became easier. The government turned a blind eye to this. Foreign companies began to make better quality items here too. Also in the imports side, even fruits and vegetables were imported. Government did nothing.
In this process, domestic production began to slow down. People liked imported things and local items got a back seat. Gradually it covered the whole gamut of Indian growth mechanism and industry, services were all affected. The GDP fell drastically.
As a first step, a zero profit objective for PSU oil giants is recommended. Why should they make profits? The subsidy in diesel and kerosene should be given in such a way that profit is zero. This step in itself will give a lot of money to the government. The diesel and kerosene prices may rise but the advantage is poor in villages will get food as transport will become costly.

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