India Moving Downward

The UPA-II government has completed three years in office and during these three years the country has witnessed all kinds of malaise that is afflicting India—whether it be the downmarch of the economy, or the fall of the rupee, rising inflation, mushrooming scams, policy paralysis, rotten foodgrains in governments’ godowns, ever-burgeoning corruption or mis-governance. One can claim that the overnight leap in petrol price by seven rupees fifty paisa is a return gift of the UPA-II to the nation on its third anniversary. If one looks at the government’s report card, one finds that it has failed miserably on every single front. The government expected the economic growth at 9 per cent, however, the economy registered a growth at 6.9 per cent during 2011-12 and this was consistently revised downward with every passing quarter. The government suppressed the fact in its report card that FDI in multi-brand retail was the biggest reform measure initiated by the government, which had to be put in cold storage amid opposition from its own allies. Industrial growth during 2011-12 ended with a measly growth of 2.8 per cent as compared to 8.2 per cent in the previous fiscal. Further, riding on high food prices in April this year, inflation for April this year accelerated to 7.23 per cent from 6.9 per cent in March 2012. Analysts see inflation soaring up to double digits. India’s current account deficit is likely to hit 4 per cent of GDP, alarmingly high, compared to 2010-11’s 2.7 per cent number. Furthermore, out of the 559 projects approved by the government under the city-specific infrastructure development JNNURM, only 128 have been completed.

So, given this situation, it is no exaggeration to state that the country is at a crossroads between doom and disaster due to poor governance. And adding insult to the injury is the fact that global rating agency Standard & Poor’s lowered India’s outlook from subtle (BBB+) to negative (BBB–), which is the lowest investment rating. Here it is important to note that market sentiments are already negative and any such news would further eat into the vitals of the market and would push equities and currency on to a downward trajectory, as is being witnessed. The rapid downward slide of the rupee is another scathing comment on UPA-II’s mismanagement of the economy despite the fact that its ‘financial wizard’ presiding over the government. Prime Minister Manmohan Singh, the ageing economist, now appears to be tired of the rough and tumble of Indian politics. In fact, the government which, like the proverbial ostrich, had buried its head in the sand, has suddenly discovered that this is a foolish move when the prospect of danger looms large. For a long time, the UPA government has pretended that it can sustain 9 per cent growth without setting fire to prices. Its spokespersons kept saying that inflation would come down. But now it has pulled its head out and finds that not only has inflation not gone away, it has taken root here.

The Congress has not been able to gain popularity in the last three years both due to the coalition pressures and its own policies—allies are regularly making threats and arm-twisting the government because the Congress as a party and Mr Singh as Prime Minister have failed to reach out to their partners or allay their apprehensions on several contentious issues. The growing lack of trust between the Congress and its partners in the Manmohan Singh-led UPA government—not to mention the widening divide between the government and the Opposition—has led to key decisions being either kept on hold or rolled back. For true progress and governance we need a majority government, which does not have to dance to the tune of parochial divisive regional parties. To gain that kind of majority, Congress has also to reform itself. It is high time it dropped its pseudo-secularism in which safeguarding minority rights has turned into pampering minorities and antagonising majority. True secularism demands equality among all and not community-based reservations all round. Unfortunately, the real problem of the UPA-II cannot be measured in graphs, and ratios. This problem is its lack of conviction to govern meaningfully. It probably started losing its nerve by the autumn of 2010, when allegations of graft were levelled at the organisers of Delhi’s Commonwealth Games, and it continued to flounder as such allegations continued to pour out month after month. Today, when people grumble about policy paralysis, what they are actually trying to say is that the government looks headless, with senior ministers having an opinion on everything, but doing little. So it would be suffice to say that India is growing but below its potential. Politics is weighing on the economy. If things are not put in order, the dream of India’s growth story will soon come to an end. And next time when Congress chief Sonia Gandhi and Gandhi scion Rahul Gandhi would campaign in Himachal and Gujarat, people would ask for an explanation about the fall of leadership in governing India. After all, it was Sonia Gandhi who had installed Manmohan Singh twice as Prime Minister. Is she now regretting?

Deepak Kumar Rath

Deepak Kumar Rath

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