Who will bail out India?

Indiais an integral part of the so called BRIC nations that has become the eye candy of investment for all bankers and funds and probably the envy of everyone for the scintillating growth numbers put up for the last 8 years. While Spain, Greeceand rest of the Europe struggles to keep afloat; India, China, Russia and Brazil are incurring positive growth.

While the picture is rosy for India for now; there are a multitude of problems which can be catastrophic for the country. India was registering 8 to 10% GDP growth until last year which slowed down to 6% in the first quarter of 2012. Even though still positive, the question is whether it will be sufficient to sustain the country if the slowdown continues. Even with the country considered on a development path and an ever expanding economy, the Indian government is still in deficit. China on the other hand has a surplus! So if the country is in deficit even with spectacular positive GDP growth numbers, imagine the scenario when growth slows down. One primary reason for the deficit is that Indiadoes not have any significant oil reserves, so all the invested forex dollars have to be spent on buying oil. While this problem is nobody’s fault, the other biggest problem is the level of corruption in government offices. Recently, Fitch downgraded India’s credit rating to negative citing corruption and lack of interest in the government circles towards progress.

Economy is one thing, but how about food and water? India is not self sufficient in feeding its own population thus needing to import food supplies. This is OK until the world is surplus in food, but what if other regions start experiencing droughts or famines? Who will export and how will we feed our country. The problem of food is multifold: too much dependence on monsoon, lack of programs to harvest rain water or conserve water, and large scale conversion of agricultural land into residential buildings (corruption again)! And how about that water everyone needs to drink at least 6 liters everyday? In the wake of loose policies on environment protection and local level corruption millions of gallons of chemicals get injected into the rivers that are intoxicating the rivers and ground water reserves.

So, it is not a question of an economic bailout that I am worried about; it is a question of getting bailed out on basic necessities of food and shelter. A country so deprived of natural resources and an ever exploding population cannot afford to drag its feet on reforms and corruption. The handful people in power are doing their best to drain the country of every last drop of resource we have, leaving the remaining 1.3 billion struggling in poverty. We hope we don’t need a bailout cause if such a need be no bailout will be able to rescue the situation!