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indushek

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Apr 6, 2010
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Problem with India is its large trade deficit, which needs external money to keep the economy afloat. When that dries up, it will impact inflation in the country significantly. Of course, cheaper currency boosts export, but India imports way more than it does export. RBI may be able to exert some degree of control to how fast money flows in and out, but ultimately it's more of a time delay. Structurally you guys have some major flaws in your economy that needs to be fixed, and quickly.
Not much of a knowledged in this regards, but yes the deficit was always there. Its the way this economy runs, guess we more depend on our internal market and even today agriculture provides a lot to the economy. Not that its bad but may be in future soe developments could be made i guess !!! like taking on manufacturing more.
 

S10

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Nov 13, 2009
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Not much of a knowledged in this regards, but yes the deficit was always there. Its the way this economy runs, guess we more depend on our internal market and even today agriculture provides a lot to the economy. Not that its bad but may be in future soe developments could be made i guess !!! like taking on manufacturing more.
I'll try to put it in simpler terms. Let's just say India is a person. He has needs for basic living neccessities (raw resources, consumer goods). As years go by, he accomulates alot of things and his house got bigger (GDP growth). However, he doesn't actually make enough money to pay for all of the things he bought. To pay, he borrows some money from others (external debt) as well as rent some rooms out to people (foreign direct investment). However, the neighborhood's economy went bad. People don't have anymore money to lend to India and tenants decide to move back to their own homes. At that point, India still needs neccessities to live, but does not have money enough to pay for it. The situation is worsen by the fact that things are getting more expensive (inflation).
 

zer_0

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Sep 17, 2011
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I'll try to put it in simpler terms. Let's just say India is a person. He has needs for basic living neccessities (raw resources, consumer goods). As years go by, he accomulates alot of things and his house got bigger (GDP growth). However, he doesn't actually make enough money to pay for all of the things he bought. To pay, he borrows some money from others (external debt) as well as rent some rooms out to people (foreign direct investment). However, the neighborhood's economy went bad. People don't have anymore money to lend to India and tenants decide to move back to their own homes. At that point, India still needs neccessities to live, but does not have money enough to pay for it. The situation is worsen by the fact that things are getting more expensive (inflation).
nice example:smitten:
 

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