Challenges of Economy

India Economy Challenges:-

Prime Minister Modi is a Hindu national leader. So many people blame him for the violence against Muslim while he was chief minister of Gujarat. Modi is up against India government bureaucracy. That makes the execution of any fiscal or monetary policy difficult. In August 2015, he was blocked from passing a bill to acquire land to promote infrastructure.

U.S. monetary policy has hurt India economy. When the Federal Reserve began its quantitative easing program, the lower interest rates strengthened the value of the dollar. This caused the value of India's rupee to fall. The resulting 9.6% inflation forced India's central bank to raise its interest rates. With all this it brutally affects the Indian economy and its growth for normal running. In second quarter, it had 9.6% inflation and 0% GDP growth. Inflation was caused by a declining rupee. Slow growth came from to monetary policy to stem inflation.

By 2017, inflation had slowed to 3.6%. Investors gone away from India and other emerging markets when the U.S Federal Reserve began capturing its quantitative easing program. When the dollar rose 15% in 2014, it forced the value of the rupee and other emerging market currencies to the lowest and weak. 

Climate change threatens India's attempts to improve its standard of living. More than 600 million Indians face large water shortages. Bangalore and New Delhi are two of the 30 cities that could deplete their groundwater in 2020. In July 2019, the city of Chennai ran out of groundwater. Around 200,000 people die from contaminated water. By 2030, 40% of the population will have no access to drinking water.

Most of India rainwater falls during the four of the twelve month of monsoon season. It isn't captured efficiently. Climate change will increase flooding from these monsoons. If nothing is done to reduce greenhouse gases, two-thirds of the glaciers will melt by 2100.

Sea level rise threatens India's 4,660 miles of coastline. It threatens megalopolises like Mumbai, Chennai, and Kolkata, which are home to 46 million people. Many of these cities are built on landfill. In Mumbai, seawater spills onto the main Oceanside promenade during high tide.

While talking about the relation of India with other foreign countries. The Russia is one of India’s biggest military allies, and China is one of its biggest economic partners. In 2006, the United States agreed to defy the Nuclear Non-Proliferation Treaty by allowing full civil nuclear cooperation with India. This is despite India’s violations of the treaty. They exploded nuclear devices and did not put its program under the International Atomic Energy Agency’s safeguards.

India wants to be treated like the official five nuclear powers: United States, Russia, Britain, France and China. The United States wants India to cap its production of fissile material, which consists of highly enriched uranium and plutonium. But India has refused. India plans to increase its warheads from 50 to 300 by 2010.

This bending-the-rule for India looks bad to U.S. allies that agreed to refrain from building nuclear capacity: South Korea, Taiwan, Brazil, Argentina, South Africa, Ukraine, Kazakhstan and Japan. The agreement was part of an overall increase in the business relationship between American companies and India. ​The United States and India should place greater importance on military cooperation, including joint defense exercises and counter terrorism efforts. 

Modi has promoted closer ties between China and India, two of the world’s largest and fastest growing economies. Because of their tight economic partnership, the countries are often called Chindia. China and India have complementary economies. India has raw materials while China has manufacturing. India has high-tech while China has the businesses and consumers to use them.