Low Profitability

The corporate sector (Essar, Ispat, Reliance, Jindals etc.) is also currently implementing huge projects (outlay of over $1 billion). This has resulted in a liquidity shortage. Further, the government is never tired of borrowing and it laps up whatever liquidity is left. All this has resulted in higher interest rates, which is the major factor responsible for a slowdown in corporate profitability. Interest rates must be brought down if India has to compete globally. Even by Asian standards, our rates are on a higher side and efforts to bring them down must be made on a war footing.