An interesting development came in between all these troubles. We are speaking about the lifting of Iran sanctions. This will enable them to pursue business with European financial institutes. They will establish a connection to the global economy after a long hiatus of 10 years. Iran will benefit a lot from the influx of dollars after beginning business with the other side of the world. Amidst all this hoopla, we have certain news that we have to take with a pinch of salt i.e. Iran will be going to add an excess of 500,000 barrels crude oil exports in a day and it will do so again in the next six months. Now, it is interesting because the global market is already in overburden with oil. The prices of crude oil have hit rock bottom and the chances are it will going to remain there for some time as Morgan Stanley has predicted 2017 will be same in terms of their low prices.
As of now, the declining oil prices have no bearing on the economy of any major country. The depressing markets in Greece, Russia, Japan, South Korea, and struggling China and US have very much to look out for the oil prices. Oil companies are feeling the heat due to lower expectation of demand and higher supply, creating a higher number of inventories. They are feeling the burden of extra oil repository due to the nonconsumption. Oil prices have dropped to such low rate earlier too in 1986 but it recovered well after a little while. This time we face rather stiff challenges because of the notorious economic condition in China, US, Russia, and other emerging countries.
The dollar is another issue in this whole low price of crude oil. The dollar is the only currency of crude oil is traded worldwide and a strong Dollar won’t make the process any easier for many of the troubled and weak countries. Economists predict that the overall market won’t go towards the scary recession situation of 2008. The situation is dark but it can recover, it just needs some reforms from financial institutions much like the Japan’s negative interest rate policy. Central banks in other struggling countries like Greece, France, and China need to step up and come with better economic reforms to boost their economy. The situations are unlike anything we encountered earlier and we may still succumb to recession due to the outrageous supply of crude oil.
We have mentioned about almost all the struggling countries so far, let’s now check about the current economic situation of our country. India has picked up pace after the numerous reforms by the Government of India. After the election of Prime Minister Narendra Modi, several ambitious projects have been announced. Projects such as “Make in India” has got a tremendous amount of coverage and it has rightly so attracted plenty of major Multinational companies. The “Make in India” program will provide a better ease of doing business with relaxed Government Policy and 100% FDI. Under this program, The Government of India has outlines 25 sectors for investment and growth. Manufacturing is one of the most important sectors in India and this “Make in India” program will make India the manufacturing center of the world. We are hoping that the GDP of manufacturing would rise to 25 percent 2022. India also has a “Skill India” program that is geared towards making people skilled in various professions. If both of the above-mentioned programs got the right degree of focus then we can hope for a better future for our forthcoming generations. Fitch has predicted that India will grow with a GDP of 7.5 percent which is not bad at all. It is confirmed by the Economic Survey prepared by the Chief Economic Advisor Arvind Subramanian. In the survey, the fiscal deficit is seen hovering around at 3.9 percent and is considered achievable, CPI inflation is reported to be around 4.5 to 5 percent, making the Employee Provident Fund optional, proposal of the widening of tax net & advises review of the medium-term fiscal framework. There are also suggestions to sell or rehabilitate underlying stressed assets, review and favor tax exemptions and sell non-financial companies. The report has shown revealing facts about contract workers. Employers have to shell out 14 percent more money to hire a worker from contractors. The informal sector has taken the worst hit because most of the contract workers work in the informal sector.
India can be the savior of the world economy with its innovative Government programs. It just needs the right implementation and extended Government support to nurture into reality. With everything in its right place, India is expected to pretty soon overthrow China and take up its place and will provide jobs to nearly 100 million people by 2022 through several innovative programs by the Government of India.