India will be no more an investment destination

Posted Date: 12-Jun-2012	Category: Caution & Alerts
Author: Ashish Kumar	Member Level: Diamond	Points: 25

Due to the lethargy of the government and the economic system, confidence of the world over India’s economy is shaking. Doubts by various international rating are being raised that the pace of the Indian economy to slide down furthermore. There are chances of investors migrating from the country. This article highlights the reasons of the falling pace of economic growth of the country.

There are no more sound bytes being reverberated of India shinning now. No one is saying India of becoming a soft super power now. The confidence that the world was reposing in India not very long ago is waning and shaky due to the weariness of the speed of the Indian economic growth. Due to this reason, within the 2 months after being declared the rating outlook negative, the situation of investment grading in India has come to the lowest ebb. The international rating agency, 'Standard and Poor's' has warned that if the situation didn't improve, it could downgrade the country's rating to the CC level, i.e. junk (trash). If this happens, then India shall be the first nation among the countries of 'BRICS' which would lose the grade of investment destination.

Reforms process needs to be augmented

The group of five nations emerging up faster in respects of their economic growth are called BRICS countries in which are included the nations of Brazil, Russia, India, China and South Africa. The agency has expressed apprehensions of the economic growth pace to further slow down. If the agency does take such decision the flight of investors would begin. As a result, the fall in rupees would gather further momentum. The pressure on government would mount up to increase the hustle the reforms up. If this doesn't happen, it would become difficult for the Indian companies raise credits from foreign.

Political obstacles and slower economic growth to blame

On the 25th of April last, 'S & P' had declared the rating outlook of India as negative. Soon after the coming over the statement of 'S & P', the value of rupee in terms of dollars fell down o Monday. The share market too lost its initial gains. The price of a dollar reached to 55. 82 rupees. As for that matter, though it closed at 55. 76. Sensex too closed at the loss of 51 points down.

The agency in its report said that the doubt of weakening is looming large owing to the political obstacles and the slowing down of the economic growth. In the last year round, due to the reform momentum getting sluggish and costly credit, the pace of industrial production had slowed down. Particularly, the manufacturing sector was worst affected the growth rate of which stood confined to 2.5 % whereas the rte of GDP remained limited to 6.5 %. Agency has to say this that on the fronts of economic system, the situation of India stands now where it was.

The meaning of ratings:

’AAA’: This means that the investments are most secured.
’AA’: This means the capacity to fulfil promises.
’A’: Though capacity to repay but could be affected by the prevailing wrong factors at the moment.
’BBB’: Capacity to fulfil promises but much more scope is there of getting affected with the opposing factors present.
’CC’: Junk or trash, meaning thereby that the weakest at the moment.
’D’: Completely incapacitated in repaying credit.

Post Comment:

Notify me by email when others post comments to this article.

Do not include your name, "with regards" etc in the comment. Write detailed comment, relevant to the topic.

No HTML formatting and links to other web sites are allowed.

This is a strictly moderated site. Absolutely no spam allowed.

Name:	Sign In to fill automatically.
Email:	(Will not be published, but required to validate comment)
	Type the numbers and letters shown on the left.

India will be no more an investment destination

Reforms process needs to be augmented

Political obstacles and slower economic growth to blame

Post Comment:

Subscribe to Email

Online Members