India’s debt crisis unfolds

India‘s economy is on its knees. The country is torn apart by extremes of
Rich & Poor

Rich & Poor (Photo credit: DanMoralesPhotography)

poverty and wealth, corruption and political in-fighting. Everyone keeps cash at home; architects building new homes are often asked to include wall cavities designed for storing cash. Businesses prefer to use hawala instead of SWIFT to transfer money. Friends in New Delhi are comparing the crisis to Zimbabwe in 2oo8 when people bought groceries for 1bnZim dollar notes. I hope it doesn’t get that far.
Here’s a quick round up from the press on why the economy is sinking. reckons new economic reforms will never work, as all previous attempts have failed in the past. The answer lies in working to eradicate the institutionalised corruption that drowns out all other state policies,  according to the author.
India is facing a full scale financial crisis, according to Bloomberg, and must curb public borrowing, reduce its external deficit, attract foreign investment and get inflation back down to restore growth. Chances of that happening are slim unless politicians get their act together.
The rupee was down another 0.5 percent against the dollar on Monday and a further 0.6 percent in early trading on Tuesday, to 66.43 rupees to the dollar, bringing its decline since early May to a little more than 20 percent, the New York Times reported this week.
And the economy’s chances of growth in the future are weak, according to several investment banks who spoke to Reuters this week.

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