Shambling Economy Engenders Sinking Feeling
The Indian economy seems to be bumbling. The policies of the UPA government have pushed the common man onto the fringe–whether they are food articles, petro products or others–and recently the rupee touched the lowest point. Perhaps the biggest attention-getter has been the plummeting value of the rupee, down 22 per cent between May and September 2013, Rs. 63 to the dollar in mid-September. The Gross Domestic Product (GDP), which was supposed to be around the mark of nine percentage, is feared to fare below 5 per cent during the current fiscal year. Furthermore, it is no secret that the slump in farm, manufacturing and services sectors has triggered this chaotic situation. According to the Economic Advisory Council’s recently released flagship publication, Economic Outlook 2013-14, the economy will grow by 5.3 per cent, far below the 6.4 per cent projected earlier. However, almost all private forecasters have been projecting even lower rates of growth between 4 and 4.9 per cent. A sub-5 per cent annual growth trajectory appears well within the realm of probability. During the first quarter of this fiscal, the economy grew by just 4.4 per cent, even lower than the 4.8 per cent of the previous quarter. Against this backdrop, the future seems to be bleak. Further, against the backdrop of looming elections before May 2014, the government has turned inward; populist issues top its legislative agenda. The Food Security Bill, passed during the last session of Parliament, will exert pressure on the exchequer. In fact, on Food Security Bill, the government’s argument that it will revitalise economy is similar to situation in Japan, where money was spent on bridges that went nowhere to revive the economy. Expectedly, this didn’t help revive the economy and only led to further deterioration in the fiscal health of the economy. In the current market scenario, taking such measures against the investor sentiments will create further depreciation pressure on rupees, higher inflation and an even higher fiscal deficit. The Land Acquisition, Resettlement and Rehabilitation Act, also passed during the last session, will create hindrance in the path of infrastructure development. Experts fear that the requirement for administrative review of the social impact of each land transaction in which the government is involved will lead to even further delays on the creation of new industrial establishments and infrastructure projects. Hence, the current slump threatens to bring back the lowest economic numbers in twenty years. This sagging performance will burden both India’s domestic politics and its global strategic goals.
The tale of the Indian economy’s fall from zenith is by now familiar–almost a new cliché. Despite being an agro-based country, India’s economic contribution of agriculture to GDP has significantly declined in the last sixty years, from 42 per cent in 1951 to only 12 per cent in 2011. During the last two decades, agriculture per capita continued to stagnate with one per cent average annual growth. However, I don’t want to go into the details of the figures of other sectors, where our economy blooms or declines. I should rather compliment the aam aadmi, who has been suffering and tolerating the bogus governments one after another since Independence. For, India’s economic slowdown will act as a drag on its strategic objectives. Take the strategic competition with China; India grew more slowly than China even during the boom years, and the present slump coincides with some speed bumps in China’s economic advancement. Nonetheless, India’s lacklustre economic performance suggests that the time when India might move into the same economic league as China is not getting closer. Deepening economic engagement with Southeast and East Asia will continue–and India is fortunate to have concluded most of its trade agreements in that region before pre-election distraction set in. But it seems the government has no political will power to take this nation on the pinnacle of glory. When the nation is facing a crisis due to the wrong economic policies of the current government, instead of applying some balm to the wounds of the Indian economy, the government seems to have no substance in its economic policies. At least, one expected the government to address the growth challenges with structural reforms. But the government seems to have made schizophrenic policy conclusion, as on one side, it speaks of expenditure reduction and, on the other side, it enhances allocation on populist priorities without estimating the quality of expenditure. At least, the government should have given more attention to agriculture and rural economy, but nothing has been done on this account. The common man is crying on the road due to the increasing inflation, but Mr Chidambaram has no policy effort in this regard. Still, according to Dr Manmohan Singh, the Finance Minister has done a commendable job in containing the deficit while simultaneously addressing the growth imperatives; If India succeeds in getting to a growth rate of eight per cent, the winner will be the people of India, especially the youth, who need desperately new productive job opportunities .As is written in the Gita, I would rather prefer to describe the UPA as immersed in the dark guna of tama, the epitome of human delusive ignorance. Like the restless butterfly, his mind and body are ever in a state of agitation; lacking the intelligence for decisiveness and the will for constructive action, he is passively pulled in one direction and then another by any momentary influence. The UPA is behaving as if it was without humility, but rude and insolent towards the aam aadmi at the slightest excuse. In spite of the present scenario, the magic wand to refine and reform our crippled economy lies in the hands of our policymakers. In fact, India’s contenders for political power need to be thinking about how to get India’s economy humming again.