{"id":600766,"date":"2026-05-24T02:21:11","date_gmt":"2026-05-24T02:21:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/600766\/"},"modified":"2026-05-24T02:21:11","modified_gmt":"2026-05-24T02:21:11","slug":"why-indias-tough-economic-reality-cant-be-ignored-anymore","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/600766\/","title":{"rendered":"Why India’s tough economic reality can’t be ignored anymore"},"content":{"rendered":"

India\u2019s macroeconomic indicators may still look stable on paper, but concerns are mounting over stagnant wages, weakening foreign direct investment (FDI), and the economic impact of rising crude oil prices amid the escalating US-Iran conflict.<\/p>\n

In the latest episode of Talking Sense With Srini by The Federal, Editor-in-Chief S Srinivasan argued that India\u2019s current economic stress predates the geopolitical crisis and stems from deeper structural weaknesses.<\/p>\n

Modi’s political messaging<\/p>\n

Prime Minister Narendra Modi recently urged citizens to reduce spending on gold, fuel, and foreign travel, while emphasising \u201cease of living\u201d and \u201cease of doing business\u201d in a marathon Cabinet meeting.<\/p>\n

Also read: PM Modi meets Marco Rubio, reviews India-US defence and trade ties<\/a><\/p>\n

According to Srinivasan, these measures are more political messaging than economic solutions. \u201cHe\u2019s trying to prepare people for a crisis, much like during COVID, by asking them to tighten their belts,\u201d Srinivasan said, adding that the government may be \u201cbarking up the wrong tree\u201d by focusing on austerity instead of structural reforms. <\/p>\n

Srinivasan pointed out that India\u2019s economic challenges have been building for years. Despite large public infrastructure spending and income tax cuts aimed at boosting demand, private investment has remained sluggish. \u201cCompanies are sitting on huge reserves but are unwilling to take risks,\u201d he noted, explaining that many firms now prefer financial investments over expanding factories or hiring workers. Capacity utilisation, he said, remains stuck in the mid-70 per cent range, discouraging fresh capital expenditure.<\/p>\n

FDI inflows decline<\/p>\n

The US-Iran conflict has only worsened existing vulnerabilities. India imports nearly 85 per cent of its crude oil, making it highly exposed to disruptions in West Asian energy markets. Srinivasan warned that rising oil prices could spill over into LPG and fertiliser shortages, especially ahead of the agricultural season.<\/p>\n

Also read: Sri Lanka\u2019s \u2018no\u2019 to bridge with India fuels counter: ‘Would raise mutual dependence’<\/a><\/p>\n

Drawing comparisons with the 1991 balance-of-payments crisis, Srinivasan said today\u2019s situation is less severe in terms of forex reserves and fiscal stability, but more troubling because economic momentum remains weak despite political stability and steady GDP growth. \u201cPolitically, this government has done very well. But from an economic point of view, it hasn\u2019t,\u201d he said, citing economist Surjit Bhalla\u2019s criticism of India\u2019s Bilateral Investment Treaty (BIT) regime as a deterrent to foreign investors. <\/p>\n

He also stated that net FDI inflows have sharply declined, noting that nearly as much money is being repatriated as invested. Combined with high market valuations and limited innovation in sectors such as artificial intelligence, Srinivasan said India risks being viewed globally as \u201can old stock\u201d rather than an emerging growth story. <\/p>\n

The broader concern, he concluded, is that both domestic and foreign investors are losing confidence in India\u2019s growth narrative, even as official macroeconomic indicators continue to appear stable. <\/p>\n","protected":false},"excerpt":{"rendered":"India\u2019s macroeconomic indicators may still look stable on paper, but concerns are mounting over stagnant wages, weakening foreign…\n","protected":false},"author":2,"featured_media":600767,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,9120,164199,205090,56,54,55],"class_list":["post-600766","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-indian-economy","tag-iran-war","tag-modi-austerity-measures","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/600766","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=600766"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/600766\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/600767"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=600766"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=600766"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=600766"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}