Is there any conspiracy behind India’s recent economic stagflation? Nothing definite can be said, but there are indications of some manmade aliments from which the Indian economy is suffering at present. For example, the flight of capital from India to various foreign countries. A recent report suggested that a few thousand crore have already been transferred to various foreign banks to different countries, instead of being invested in India. Moreover, there have been talks about stringent laws being enforced during the last couple of years which caused disenchantments amongst investors. This allegation can be rubbished outright. There is no country in the world where investors call the shots. There are certain sets of rules in every country that every investor should abide by. Again, the way prices of essential commodities are going up every day remind us of the infamous rise of onion prices during the late nineties in which the then ruling party had to pay dearly for failing to curb the price.
Before proceeding further, let us understand what stagflation means. In short, it describes a position where the economy is devoid of demand; but the cause is unknown. If one considers the Indian economic situation closely, it will be found that even economists are burning the midnight oil trying to find out what is ailing the economy. Everyone’s opinion differs. Some experts are calling for urgent and huge investment to get rid of the situation; while others are suggesting that India is suffering due to the worldwide economic recession. In reality, it is actually a free-for-all situation, where everyone is expressing their opinion without suggesting real remedies. All these are happening because no one is sure about the exact illness.
With the report about the flight of capital, it is now confirmed that there is no dearth of funds in India. It is apparent that it is the investors who are not interested in India anymore. This is happening at a time when the country is rapidly making progress in the list of ease of doing business. The said list is prepared on the basis of certain facts such as red tapeism, availability of land and resources, time for clearance, etc. Thus it is difficult to understand whilst the situation is such, though all indicators show an investor-friendly market, why are those who have enough funds not investing in India? It is completely up to an investor where he/she chooses to put his/her money. But at the same time, he/she is answerable to the nation that he/she belongs to; why is he/she not interested in investing? Further, it is not the case that all capital going out is being invested in other countries. A major portion of that fund is lying unutilised in foreign banks, where the return is surely less than what the fund could fetch if engaged in a business venture. But for reasons unknown, prospective Indian investors are avoiding investment in their own country.
Here, the question of stringent laws should be discussed. If the laws introduced in recent times are examined closely, it will be found that contrary to popular perception, laws have actually been made business-friendly. Is it a case of ignorance about the laws or an effort by our enemies to keep India investment-starved? The government should examine this fact on a war footing to ascertain the real cause of the economic slowdown in India.
