Uncontrolled Bad Financial Policies of Indian Government

Every Government wants to rule with the best of its policies but for a country having +120 Crore population, many Governments make policy mistakes, which cost the country tremendously & badly. Same mistakes have happened by many of the past Indian Governments & also the current Indian Government. Here are highlighted some of the major Bad Financial Policies of the Indian Government. 

Living on Foreign Dollars: 

India is a country of +120 Crore population. Here more & more younger class shall emerge in coming years who shall like to have a house of their own & enjoy all the modern gadgets, luxuries of life. Now, do India is equipped to handle all that demand? Indian Government has little done to promote its own small scale & middle scale industries which can cater to these modern gadgets like Mobile Phones, Televisions, Laptops, Computers etc. Take the case of mobile phones. Most of the Indians, even poor are having mobile phones nowadays but most of these are imported for which you require foreign exchange, increasing its demand. If there were good fully indigenous Indian companies providing these mobile phones then India would not have required foreign exchange to import it / its parts. Same is the case with Televisions, Laptops, Computers etc. for which or for their parts, huge foreign exchange is required to import it. Had Indian Government developed fully indigenous Indian Industries for these products, Indians would not have required that precious foreign exchange to import these. Indian Government would have taken measures which would have stopped Indians Living on Foreign Dollars & that would have controlled the increasing Current Account Deficit (CAD).

Incentives to stop investing in Gold: 

Indians Love Gold. Reason being that they have very little good investing options. Though Indians have options of putting money in banks but Indian Government has made putting money in banks like Fixed Deposits (FDs) etc. unfriendly to investors. Indian Banks nowadays give interest rates which somehow do not cater to the increasing Inflation after paying the taxes on its interest. Why can’t Indian Government make investing in Fixed Deposits (FDs) investor friendly by not taxing the interest on it. If interest on Fixed Deposits (FDs) is made tax free then people shall put money in FDs than putting money in Gold. Secondly opening a bank account requires so many documents while Gold can be bought across any street of India hassle free, from any shop & it does not require any documents to purchase it. So Indian Government needs to make it more investor friendly to open an account in a bank & interest on investment has to be tax free as then only precious foreign exchange to import Gold can be saved.

No control on Vehicles (cars etc.) coming on Indian roads:

Singapore has a policy that it restricts putting more & more cars on Singapore roads. They have made a policy like that “Huge money” is required to be paid to Singapore Government to have a license to have your own car & to put it on Singapore roads. Why have Indian Government allowed uncontrolled flow of cars on Indian roads, which guzzle all that fuel, which has to be mostly imported, for which precious foreign exchange is required. if Indian Government would have made some policy by which cars would have come in a controlled way on Indian roads then Indian fuel import bill would have been reduced, which is a big reason for increasing Current Account Deficit (CAD) in India.

No push to be self reliant on Coal & Oil: 

Indian Government has lagged very much to have policies which would have made India self reliant on Coal & Oil. If Indian Government had given a great push to develop indigenous industries which would have catered to the demand of Coal & Oil then all these precious import dollars would not have been required. So Indian Government has to immediately push for those policies which shall produce more & more Coal & Oil in India only so as to reduce the import burden on Indian economy.

In short India needs to start earning dollars by producing more & more Indian products & then exporting these to earn more dollars, just like China has done with its economy. Indian Government has to stop living on borrowed dollars which is like soft money of Foreign investors, which is basically a loan to India & which they shall take back someday. Let India be self reliant on its Dollars. Let India earn its dollars than borrow it to sustain itself. May God Save India From This Financial Mess.

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Why Indian Rupee will slide down to Rs. 100 vs 1 US $

Sri Lanka’s capital city Colombo is it’s largest city. In Colombo, you can find all the Foreign Cars moving, all the imported goods & all things Foreign that can be found all over the world. In simple terms, most of the things that a person considers a luxury is imported from other countries. Result is that Sri Lankan Rupee quotes against 1 US$ to Rs. 132 nowadays. Same is the case with Pakistan & the Pakistani Rupee quotes as 1 US$ to Rs. 102. Reason being exports are much less while imports are much more.

Same problem is with India now that its exports are getting much less while imports are increasing day by day. India’s “Current Account Deficit” (CAD), the difference of exports & imports is increasing day by day. India’s main Foreign exchange source is not permanent but temporary & that Global players / investors are putting temporary money (dollars) in Indian markets (share markets & other money markets) which they borrow cheaply from other world markets where interest rates are very low. This temporary money goes out in the same way as it comes as world markets change very rapidly as per changing world market conditions. This flow out of dollars from India in future shall put lot of pressure on Indian Rupee & it shall depreciate further & also very fast as Indian Government is not having any concrete plans to stop it’s depreciation.

India’s population is so much that in the coming years, more & more younger class shall be having their own family. This younger class shall be using more & more imported goods from China, Europe, USA etc. countries, which shall increase imports like anything. This shall increase the Current Account Deficit (CAD) badly, which shall lead to depreciation of Indian Rupee very fast. Also many Indian companies are having huge debt in dollars terms & it’s payment shall also put lot of pressure on the depreciation of Indian Rupee. 

Indian Government / Reserve Bank of India (RBI) is also a great buyer of US $ / dollars to increase it’s foreign exchange reserves & it shall also put lot of pressure on Indian Rupee which shall lead to depreciation of Indian Rupee. As Indian Government is not having any concrete policies / plans by which Indian exports can be increased substantially & can contain the rising Current Account Deficit (CAD), so all of the above said factors shall lead Indian Rupee to slide down to Rs. 100 vs 1 US $ in next coming years. Indian currency shall soon be on the path of Sri Lankan Rupee & Pakistani Rupee, which are quoting above Rs. 100 vs 1 US $.

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