Video editors: Vishal Kumar and Mohd Ibrahim
Cameraperson: Sumit Badola
Until a few days ago, the debate on the Indian economy was pivoted on determining whether or not it is experiencing a slowdown. However, that’s a thing of the past now. On 3 September, Indian markets witnessed what can only be termed a ‘meltdown’. The slowdown resulted in the market’s steepest plunge in the last eleven months. Shares of PSU banks have been worst-hit. Meanwhile, the rupee depreciated to 72.09 per US dollar.
In the previous couple of weeks, the government has announced a spate of measures and policy decisions to counter the economic slowdown. Finance Minister Nirmala Sitharaman announced that ten public sector banks will be merged to form four entities.
She further announced the rollback of excess surcharge on FPIs (Foreign Portfolio Investments). At the same time, the government announced several policy changes to increase the influx of FDI (Foreign Direct Investment).
During a Cabinet briefing on Tuesday, the government announced that to revive the IDBI bank from crisis, an investment worth Rs 9,000 crore has been approved. The Centre and Life Insurance Corporation (LIC) will collaborate to make the investment. The government’s share will be Rs 4,557 crore while LIC will invest Rs 4,700 crore.
However, the measures have proven insufficient to create confidence in the market. The sentiment of the market is weak. Times like this require a complete and comprehensive solution to be provided for the economy, as opposed to quick fixes in bits and pieces. Taking bold steps is important to reverse the Indian economy’s slowdown.
For starters, investors should switch from equity SIPs to debt SIPs or start investing in fixed deposits. The reaction of the market cannot be gauged as yet. Selling FPIs, changing FDI norms and merger of banks have not sufficed to bring the economy back on track.
The government should accept that the economic condition is dire. The whole country, the whole world, has its eyes set on the government, awaiting its next move.
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