The problems lie in 1. Bad handling of macroeconomics 2. Not controlling the banking system in their investments & credit during the time of growth of economy 3. Loss of focus on agriculture 4. OIL OIL OIL OIL OIL 5. OIL OIL OIL OIL OIL
The solutions: 1. Arrest the job cuts & Create more jobs with directed investments & credit in the industries that are suffering due to price rise of input raw materials, especially engineering industries. 2. Increase the investments in Cement & Steel plants & their supplies for increase in production & hence meet demand & arrest the price rise. Duty reductions are no solution. This will consequentially reduce input costs in Infrastructure industries & will allow them to complete without cost escalations. 3. Increase investments in public infrastructure there by creating more jobs in direct & indirect way. This will automatically push development. 4. Increase institutional credit to agriculture. Drive agricultural extension services for proper guidance to farmers. Properly regulate agricultural markets. 5. Customs duty reduction for OIL. 6. Give norms to banks for increasing interest rate on certain kind of loans such as personal loans etc. Taking away liquidity from the market by raising CRR is no solution. This will cripple investments in housing & automobiles by common man. This coupled with job drying will cripple India growth story. Yes for sometime micromanagement of consumption needs to be done. Then only growth story continues.
