India, the world’s tenth largest economy according to the International Monetary Fund, is seeing troubling signs in the short-term outlook. Recently, India has seen a slowing growth rate in GDP, increase in inflation to 9.1%, and a decrease in local investment. Many economists attribute these worrisome signs to the corruption and scandals plaguing the growing nation. In recent months, the central government has been struggling to get the economy back on track.
Any efforts put forth seem to be undermined by the fact that political interests trump the solutions to fix the problems that plague the economy. The central government has dealt with allegations of corruption into deals known as sweetheart deals. Sweetheart deals are deals in which the government awards a contract to a business in an abnormally favorable way. The alleged deals are in no small amounts either; some reaching billions and billions of dollars according to one report. The most notable involved the award of wireless communications licenses to wireless service providers. According to an audit by an outside party, the government may have left $40 billion dollars on the table by selling the licenses too cheaply.
This corruption problem coupled with the fact that outside nations have reduced investment in India in recent months has put the economy on a downward sloping path. Economists still hold out to say that the long term future remains bright due to the young population, growing middle class and increased demand for appliances, cars, or housing and highways, but if the central government can’t get a handle on the corruption and pass new policies to address the shortcomings the economy is having currently, the short term problems may grow into long term problems.