Indian Economy under stress

India needs to take immediate steps to improve supply chain distribution if it wants to keep the inflation low during FY13. Lot of inefficiency exists in the procurement of food item from the source to consumer which is the prime cause of inflation in India. Although Inflation is with in 7% level it may go up once the Diesel price gets decontrol.  RBI has supported the Economy by reducing the Repo interest rate by 50 bps to 8% in one go but further rate cuts depends upon the way inflation behave in the coming Months . GDP growth rate has slowed down in FY 12  as against FY 11 which is cause of concern for all stake holders. RBI will play key role again to keep a balance between inflation & growth rate. India needs USD 1trillion in next five year to fund Infrastructure project which Government of India cannot Fund itself. India needs to make changes in Investment Policy on regular basis to have sustained foreign Capital flow to fund these projects. Private sector Investment should also be encouraged by restoring business confidence and clarity on policy road map.  Keeping in mind the poor performance of the ruling Government it is unlikely to drive policy reform in the near future. Any positive change for Economic growth will be pulled down by its own allies and definitely by the opposition. Diesel price hike has been delayed by Government only due to political constraint. Mired with corruption charges present Government is finding it difficult to push ahead any Economic reform. Political deadlock continued in the winter session and is likely to be similar in the ongoing monsoon session. FY13 Budget did not announce anything new to drive the growth back .Government will continue to face lot of challenges till 2014 General election. It may not take announce any populist scheme due to fiscal constraint but will also fail to build consensus with opposition for Economic reform.  Forex reserve continued to be below US$300 billion since last 6 Months due to lower foreign inflow. As the domestic fundamental is not going to change in the coming Months rupee will continue to be under pressure.