India’s State of Economy

Does it help India if its prime minister says, days after days, months after months, years after years, India is not the only country hit but all emerging markets have been hit or for that matter, the present situation is due to external factors or as one country took a policy decision in its interest.

Few days back, the finance minister P Chidambaram came out with ten point prescription to cure the economy: 1&2. controlling fiscal deficit and current account fiscal deficit, 3.Adding to the reserves, 4. Reviving the investment cycle, 5. Quicken the capex programme of PSUs, 6. Capitalise the public sector banks, 7. Capitalise the public sector banks,8. Encourage manufacturing, 9. Encourage exports, 10. Resolve impasse in coal, iron sector.

Chidambaram speaks well. His speech is impressive. Listeners are attentive. And interestingly, Manmohan Singh was there throughout, but neither Sonia nor Rahul. For them, the passing of Food Security Bill was the priority and not the state of the Indian economy. Neither they are interested in that nor they know much about it.

But what is so new about it? Why has it taken almost 10 years to pronounce this for this government? Who stopped the government to have taken the actions mentioned in the Chidambaram list?

Chidambaram vowed to contain fiscal deficit at 4.8% of GDP and CAD at $70 billion this year. But how many persons who matter believe it in this pre-election year?

And then after the tremendous pressure from parliamentarians, the prime minister made a statement in the Rajya Sabha with no concrete plans to meet the deteriorating economy indicators coming almost on daily basis, and blamed the main opposition party for the present situation on a day when the government provided a fresh data that India’s economy grew at the slowest quarterly rate since the global financial crisis in the three months through June, lower than expected and hurt by a contraction in mining and manufacturing.

The prime minister may discard the opinion of the opposition leaders for political reasons but why should he overlook the views of so many on live TV channels and in print media. Why should not he hear to the sane voices from the industry or his own former advisors or working members? Why should the people of the country not believe the retiring governor of RBI?

“RBI governor’s parting remarks It was “inaccurate, unfair and misleading” to attribute the moderation in India’s economic growth — which tumbled to 5 per cent in the year ended March 31 from 6.5 per cent in 2011-12 — to the RBI’s tight monetary policy. “Growth had slowed because of a “host of supply-side constraints and governance issues” which were clearly beyond the purview of the RBI.”

Manmohan Singh singlehandedly got two policy decisions changed in his tenure, the first was on Nuclear Deal, and the second to bring in FDI in multi brand retails. As the media reported, he staked his prime ministership even for the first one. Sonia yielded. Why couldn’t he convince the ill effect of food security bill and got it postponed for right time? Why can’t the government eliminate the leaks of the PDS if the bill is so much necessary? Is he not aware of the corruption in transportation? As some opined, ‘to rush through the food Bill nationally without putting any checks-and-balances systems in place is criminal’.

However, the prime minister did neither enumerate some short term specific action plans nor talked of the way he will boost up the implementation mechanism. He preferred to give his prescription-“The easy reforms of the past have been done. We have the more difficult reforms to do such as the reduction of subsidy, the insurance and pension sector reform, eliminating bureaucratic red tape and implementing the Goods and Services Tax (GST).”

Who stopped him to go for building consensus on some, or a special session for the other or to come out with some more bills to eliminate the bureaucratic red tape? Is he not afraid of communicating with opposition leaders because of his Madame Boss?

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