Although India escaped the 2008 Global recession, present situation is just similar to what it was in 1991. Recently published data of RBI shows a negative BOP ( US$7.1Billion) for the nine Month period of FY12 as against surplus BOP of US$11 Billion in the corresponding period last year . CAD is has touched 4% of the India GDP. The only way to improve the CAD is to increase Export and reduce the Import. While India Export had picked up in the first few Months of FY 12, in the last few Months it has slowed down. Due to liberal economy Import is increasing rapidly. High Crude price is also increasing the Burdon coupled with the excessive import of Bullion to India. Due to high CAD and negative BOP fresh flow of Funds to India is very unlikely in the near future. Recent untimely activism of Government of India by touching controversial concepts like “GAAR” has disturbed the FII inflow segment also. The political fragileness is not allowing GOI to announce popular FDI guidelines. IIP data is showing wide fluctuation , Manufacturing and Service PMI is reducing since last few Months , Inflation is still in the range of 7% , higher Dollar Rate , Low corporate profitability are few more reasons to get worried . Forex Reserve of India is just equivalent to Six Months Import so RBI can not intervene at this point to intervene in the Forex Market. To conclude lot of negative factors and not a single positive factors for India at this point of time .
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