Understanding The Background Of Macroeconomic Situation | macroeconomic situation

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” macroeconomic situation “of India” is “uncertain”. The finance ministry has released some economic indicators, which are favorable for the Indian economy. However, former finance minister called the report a “favoring of wishes”. “The real economic growth of India may be closer to –10% in 2021-15,” finance secretary Shankar XVI told media. ” macroeconomic situation “of India” is “uncertain”, say experts.

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” macroeconomic situation “of India” is “uncertain”. The finance ministry has released some economic indicators, which are favorable for the Indian economy. However, former finance minister called the report a “favoring of wishes”. “The real economic growth of India may be closer to –10% in 2021-15,” finance secretary Shankar XVI told media. ” macroeconomic situation “of India” is “uncertain”, say experts.

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The statement released by the ministry of finance says “growth in India has been moderate in last two years.” It is also hoped, “Fiscal and monetary policies will remain accommodative to India's need for external financing and support for its domestic requirements for liquidity and credit, both in the short-term and the longer term.” The finance ministry expects global economy to recover from recession and says, “Across the world, there are signs of recovery in the global economy, with some resilience in certain areas.” It also hopes, “Fiscal policy will be more accommodating to the objectives of the government, including fiscal stimulus and reform efforts.”

The global economic slowdown is expected to have a significant impact on India's macroeconomic situation. ” macroeconomic situation “of India” is “unchanged” and there is no scope of any rapid economic recovery, say financial experts. The finance minister of India has released a series of reports on macroeconomic indicators that indicates that the Indian economy is going through some temporary upturn, though global financial analysts are not unanimous on this view. There is a possibility that Indian authorities will overreact to the global financial crisis and will take measures to reverse the inflow of external financing.

The rating agencies are not very positive about the macroeconomic situation of India. They are of the opinion that the economy will experience significant macroeconomic headwinds over the next two to three quarters of the year, mainly due to the global economic slowdown. This will lead to a pick-up in inflation, but it remains doubtful as to whether the Reserve Bank of India (RBI) will bring rates down low enough to bring down inflation to acceptable levels. Global financial analysts believe that a combination of monetary policy, fiscal stimulus and structural reforms would be required for an economic revival in the Indian economy. However, the finance minister of India is confident that the fiscal policy and the indirect fiscal stimulus measures taken by the government will help the economy makes progress. The current estimate is that the gross domestic product (GDP) will grow by 5% in the first year of the economic recovery phase.

On the other hand, the economists of the International Monetary Fund (IMF) are quite cautious about the outlook for the macroeconomic situation in India. According to them, the recent global recession was the most profound and long lasting since the . . . . . . onset of the Industrial Revolution. Moreover, the post-recession period is characterised with rising global economic instability, increasing fragility of the internal aspects of the Indian economy, increasing risks posed by high levels of public and private debt and declining potential growth. A major part of the funding required for debt restructuring in the US is related to the country's trade deficit. If the current global economic downturn continues at the same intensity, then the position of the Indian economy will become increasingly difficult.

In order to counter the disturbing macroeconomic indicators, the Indian government has taken important steps to boost the economy. These moves include introduction of new fiscal policy and market based policies, structural reforms and tax liberalization. Besides, the central bank has also been forced to take some easing measures by lowering the rate of interest, raising the base rate and other easing measures. The government has also made an effort to curb excessive financial spending and other financing options which are believed to have been a major cause behind the weakening of the global economy. Overall, it can be said that the current global economic recession is being felt in India as well.

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