Today India is facing economic difficulties represented by a high budget and current account deficits, which slow down economic performance and expose the country's structural inefficiencies. It has so far been able to enjoy a relatively low degree of openness of the economy, thus defending itself against external shocks, and a very advanced tertiary sector which produces 55% of the national GDP. From the data of the November Coface study, it emerges that the slowdown in Indian growth and the consequent restrictive monetary policies launched in 2010 and 2011 have depressed credit and investments. But, in reality, this is nothing more than a consequence of the lack of infrastructure in the country. The economic recovery, especially productive investment, depends heavily on the implementation of the delayed structural reforms slowness and inaction of political power.
Another cause of inefficiencies can be found in the strong energy dependence, especially from oil and coal prices. The country enjoys coal deposits, but not large enough to meet domestic demand, while rising oil prices and the simultaneous devaluation of the rupee they have done nothing but increase costs for businesses. The biggest problem is thestructural increase in the price level (at 7,8% last September), due to the scarce supply of foodstuffs, given the slow progress of the agricultural sector and a inefficient distribution system. And structural deficiencies are not only reflected in citizens, but also in business, where the lack of efficient institutions has generated a vicious and cumulative cycle. Most of the enterprises that benefit from government support operate in the agricultural sector and in small industry, employing the majority of the workforce, but producing only a third of GDP. Not forgetting that productive investments largely depend on access to international financial markets, while Indian ones still have serious limitations. It is generally the large companies that have access to the international financial markets, getting into debt and thus affecting the country's public debt, which has increased by 27% in the last three years. A situation aggravated by the fact that local banks are forced to hold government bonds, which represent more than 23% of liabilities. So much so that, in 2011, as many as 26% of companies operating in India, speaking about payment arrears, denounced the managerial chaos of the credit system.
The Indian economy suffers from a lack of infrastructure, particularly in the electricity sector, precluding companies from efficient production activity and dissuading local and foreign investors from operating in the country. Furthermore, the political and administrative situation shows high levels of corruption and a deterioration in institutional regulation. The need therefore emerges for a package of structural reforms which, betting on India's cultural peculiarities and strategic potential, are capable of attracting large quantities of productive investment from abroad. Therefore, implementing a development strategy focused on politics, energy and finance, without missing infrastructural pieces, ma intervening efficiently from a distribution point of view. An indispensable condition for the development of the internal market and the attraction of productive investments, in a virtuous and cumulative circle.
