US ‘fiscal cliff’ deal small step, not a climb
The tax hike for the middle income group and richer class would imply a reduction in private consumption. The US economy has been performing comparatively better than many other developed economies with productivity in manufacturing showing a rising curve.
But after the three months period, it would be interesting to observe how it faces the challenges of massive fiscal deficit without adopting a few painful measures involving cut in social expenditures. History shows that our country is adept in pursuing this strategy quite a number of times but with limited success.
In the 1980s, economic reforms were pushed back and India missed the bus which China hopped onto and moved ahead.
The reforms in 1991 were pushed from the top with the country’s economy hopelessly seeking a reprieve. Whatever our country has achieved today largely owes to the economic sagacity and timely steps taken by the then finance minister backed up by an unsuspecting prime minister.
Economic reforms deemed to be necessary for a country do not offer multiple chances to be successful. Currently, iron ore prices have moved up from a low level of $121/t cfr China in the third week of November’12 to $154/t cfr, a jump of 27% within a period of one
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