Global Economy, Economic Environment, Labor, Money & Finance, GDP
The global spotlight has been on the troubled Indian economy in recent weeks as investors fear that a plunge in the rupee will evolve into a destabilizing financial and economic crisis. The current turmoil is partially a function of broad emerging market difficulties but also very much reflects unique growing problems brought about by an inefficient regulatory regime, a shortage of skilled labor, widening fiscal and current account deficits, and poor economic governance. Nonetheless, while the moment is indeed troubling for India, U.S. manufacturers need not worry about a repeat of the severe 1991 balance of payments crisis. External debt is much lower than during that year and foreign exchange revenues are able to cover short-term obligations. Indian policymakers, however, do have to heed current distress signals and take action. Otherwise, this large and globally important country faces a bleak future.