Present economic Situation and IMF loan.

The economy is in bad shape due to mismanagement on several fronts. Liberalisation has unfortunately let loose non accountability and the failures are tolerated as if nothing has gone wrong.Series of scams and some popular measures like write off of farm loans etc have taken the economy to such a crippling condition.The mistakes cannot be allowed again to be repeated by the Govt again although it may like to pass on the burden and blame to the next Govt if there is a replacement which is not ruled out as people are fed up of spiraling prices, corruption and miseries of life. The solution , how ever does not lie in going for an IMF loan as happened in 1991, but to raise some resources through NRI bonds even if it is slightly costlier.Some incentives can be attached to these bonds in such a way that these loans  do not eventually have to be repaid in dollars.There are umpteen ways of raising resources domestically also by bringing in some innovative schemes to tap the savings of the HNIs, Cash Rich Companies,etc. The present mood of the people and investors needs a change and the confidence in the Governance system has to have a boost to save the economy from further disaster.The Financial System has to be given a facelift and the initiative has to come from SEBI to attract NRIs to Indian market in a large scale.Better to avoid foreign debt particularly IMF loan as it may have its own baggage to be taken care of and that also will affect the masses. Any measures without taxing the ordinary masses are welcome.

Dr.T.V.Gopalakrishnan

(This comment appeared in ET in response to an article on "It might not be a bad idea to emulate Pakistan and approach the IMF, but on our terms".)