Warning Signals

The 2012-13 Indian financial year has started with some early warning signals that the Indian economy, which was seen as one of the great big hopes in a bleak economic scenario, is not without its fault lines, Diamond World stated in Weekly E-Post.
On the export front, figures for March showed a year-on-year fall for the first time since the financial crisis of 2009. It’s a logical development of the decline that set in during the last quarter of 2011, as international prices of oil and gold (two of India’s largest imports by value) soared, even as demand for the dollar revived, impacting the rupee-dollar rate.
The rupee continued to slide in April – the fourth consecutive month, almost breaching the 53.5 mark this week. Analysts expect that it could decline further, even to 55-56 levels.
Simultaneously, India’s growth rate has slowed down, leading to a downgrade of its credit rating by some international agencies.
A denting of India’s export-led growth will have an impact on domestic demand too, as profits may decline and less disposable income will be available with consumers.
It’s not all dark clouds, however. Signs of a modest improvement in the US and an Indian economy that is still growing at a healthy rate of over six per cent are, indeed, tiny silver linings.
India’s gem and jewellery sector needs to read the warning signals and evolve strategies for dealing with them. Those who do so correctly will be better placed to ride the wave when the revival comes.