a vicious circle

Its amazing the way macro economics work.
A pin drop somewhere can cause a earthquake elsewhere.

Like.. currently the steel prices are rising beyond control.
This is directly affecting the manufacturing sector.
But wait, the story doesn't end there.

Against the rules of the game, Maruti Udyog has decided to increase the car prizes.
Soon Tata Motors will follow the suite.

This will directly cause inflation in transportation cost.
Transport is the backbone of any economy. Every aspect of the economy depends upon the transport facilities.

Basic necessities like food and oil are available to us cos of this transportation industry.
An increase in the cost of vehicles will increase the cost of transport.
Also, increase in cost of steel will increase the cost of road construction and general infrastructure development.
Not to mention the high prices of fuel.

The prices of eatables are set to increase.
A common man has no option but to have more income to run the household.
Thus, there is an expected increase in the salaries and wages.

That goes in hand with the current high inflation rate.

When the basic needs are costly, it implies that the other things like services and entertainment are not sought for.

With recession in the manufacturing sector and slow growth of agriculture sector, the service sector will automatically get hampered cos there is no money to avail the services.

Service sector depends upon the mass utilization of services.
So a small effect here can bring it down in no time.

The banks are enjoying themselves by charging high rate of interest and thus holding down the cash flow.

This is the time to spend money, but where will the money come from.
Should the government cut down the taxes or should the banks encourage loans by cutting the rate of interests.

One aspect of the economy that many of us overlook is the R and D
Yes...
This is one thing that needs major attention.
Research is needed not only in form of technology and science, but also in management.
Management of Funds, Resources, Man Power, Environment,

I think this is the time when scholars and learned people should work overtime and more money should be spent on development of society.

Too much emphasis on these three major sectors has resulted in social growth.
Now is the time for diversification.
Let the money be spent on social uplifting. This seems to be non profitable. It is, but, for a shorter period of time.
A better society will automatically bring the economy back on track. People who don't have money today will get it tomorrow, invest it a day after and thus it will be back to where it was in a few days time.

As the money remains in a flow there wont be any stagnancy as it is today.

There will be a 3 dimensional growth in the society and that is what is called as development.