The position of India seems critical & confusing as we enter 2012

In the Economic front India is facing challenging situation. The Political system and particularly the central Government which is just surviving each day without any visible work is adding to the pressure. The action of all regularatory authorities are totally silent since last so many months. We have not heard any new policy decision from any side. Government has completely failed to take the opposition along due to its own Ego and misguidance by few. No new Bill is passed in the ongoing winter session. This is an unfortunate situation. RBI kept trying to control the inflation by hiking the interest rate putting lot of pressure to the Growth. Now each one is talking about a pause in interest rate hike. Does interest rate hike helped RBI/ India to curtail inflation. According to me NO. As per my view RBI will very soon start reducing the interest rate as the implication of high interest rate & inflation is now clearly visible in the latest two announcements of IIP data and GDP growth rate. The latest release of IIP date  for the month of October 2011 has surprised each one. De growth has been reported and that too 5.1% ! . Capital Goods sector which is considered to be the barometer of judging where Industry is growing has degrown by whooping 25%!. Rupee is depreciating each passing days and has touched a new low today at 52.80. The way GDP data , Inflation data , IIP data  , Trade deficit data is coming out it is not too far to see exchange rate of 55 against USD. The situation is getting more complicated in the Dollar front due to prolonged confusion prevailing in the Euro Zone. Every increase of Dollar will put pressure on India Trade & Current account deficit. In the fiscal front also the Government has failed miserably. Due to the forthcoming state election Government may not dare to reduce subsidy. Government has completely abandoned its divestment plan for its PSU Company. Government has no Money to fund its biggest Bank SBI due to shortage of Fund. What a position for India as we enter 2012. FII’s are simply running away as they do not foresee corporate earnings growth at least for FY 2013. Consumer spending is likely to decrease significantly keeping in mind job uncertainty.