The prospects of Indian economy are not bright; rather things are becoming bleak day by day. The recent trend of sharp downward trend in the exchange rate of Rupee shows that the international community too considers Indian economy in poor light. Experts opine that this is on account of rising current account deficit (CAD) which shows that our imports are rising faster than our exports. The solution that the government is presenting and assuring that steps are being taken in that direction comprise increasing inflow of fund from Foreign Institutional Investors (FIIs) and relaxing cap on Foreign Direct Investment (FDI). But these steps are not bearing results.
FIIs are more interested in their short-term monetary gains. They come easily and go fast. They are present one day as ghosts and may fly by the next night. It is reported that they are nowadays disposing their Indian stocks fast and leaving Indian shore in droves. They may be finding investment in dollar or other greener pastures more attractive. Our increasing dependence on them is dangerous for the health of our economy. The case of FDI is sensitive and its desirability and extent should be deliberated upon at length before any decision to relax the existing cap on them. It has to be ensured that East India Company’s syndrome is not repeated.
Our correct mode is to look at the strength of our own economic fundamentals. There is need to adopt more basic economics and see what can be done to increase our production and export and what checks are required on imports. We should not let our imports increase in the present rate in the name of free market economy, globalisation and liberalisation which we have been experimenting with for more than two decades from mid-1991. We have had enough experimentation.
The economic reform policy mooted by Manmohan Singh as Finance Minister has continued unrestricted from day one. Even the period when NDA was at the helm of affairs, the economic policy of Manmohan Singh continued in vogue. Now he is the final authority and has the services of trusted and able colleagues like Chidambaram and Montek Singh Ahluwalia. The integrity and expertise of the trio is not questionable but the benefits of the reforms as proclaimed never came true, rather things have gone awry. The economic reform policy adopted in 1991 has failed. Structural change in the economy is required. Neither Nehruvian Socialistic Pattern of economy was the solution nor the whole-sale-capitalism, which we adopted later, is the panacea.
Time is ripe to consider alternatives. We humbly urge the nation to judge the efficacy of the Interest-Free Ethical Economic System of Islam and adopt the same without any bias or reservation. The salient feature of this alternative is the basic demand and supply economics shunning everything that corrupts this including interest, consumerism and speculations amounting to gaming and betting.