A warning to Indian economy

Whatever situation the US economy is passing through the present time clearly reflects that the recession might return there very quickly if some solid measures are not taken in time to prevent the worsening situation. Though the Finance Minister Pranab Mukherjee has described the downgrading of the US government by credit rating agency as a grave situation,which needs to be analysed, it would not be wise to cover-up the lapses in economic policies adopted by us for the last 20 years.
The US’ downgrade, the S&P said, reflects its opinion that the fiscal consolidation plan which Congress and the administration recently agreed to “falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.
Other prominent credit rating agencies - Moody’s Investors Service and Fitch Ratings - have affirmed their AAA credit ratings even as President Barack Obama signed a bill that ended the debt-ceiling impasse that pushed the Treasury to the edge of default.
The blood bath in global market on Friday is a bad omen for global economy. The situation must be tackled at the earliest so that there must not be further downsliding of global market.
In an unprecedented move, Standard & Poor’s downgraded the US governments ‘AAA’ sovereign credit rating - a development which raises concerns that investors will lose confidence in its economy. This comes a day after a bloodbath was witnessed in the global markets including those in Asia.
All the developed and developing economies of the world must sit together and take a unanimous decision about the merits and demerits of economic globalisation that we all have experienced in the last 20 years or more.
One thing is also crystal clear that no developing country of the world can pursue its economy in isolation. These-days, there is no taker for closed economy. So, openness of market is a pre-requisite for any developing economy.
In india, the BSE sensex also plunged more than 700 points before recovering partially with investors selling across the board. Allaying domestic fears, Finance Minister Pranab Mukherjee has said that this is due to domestic factor as he rejected the charge of opposition about the back-breaking price rise of essential commodities by saying that it is due to the influence of external factors of recession. But this much logic does not hold water so far as sky-rocketing price rise is concerned.
According to the finance minister , the stock markets have fallen due to global factors like weak recovery in US and spread of debt burden in Eurozone. Current volatility is temporary.
Market regulator Sebi has also assured that there is nothing for the people to worry because our risk management system is working perfectly. All the settlements are taking place.RBI has, however, has said that India will have to learn to live with volatility in the global economy.