Ruchir Sharma, the author of Breakout Nations gave India 50-50 for either being a breakout nation or being a nation which failed to realize its potential to be among a few hottest economies in next few years.
Which way will it go? Some reflections -
Looking at it today, the Indian economy is drifting rudderless. The current government is embroiled in all sorts of problems - from allegations of massive corruptions in CWG, spectrum and coalmines allocations to managing its errant coalition partners and floor of the Parliament. It is left with little time and inclination to focus its energy on setting the sail right to arrest the drift in economy and steer it forward in the right direction. With the general election just one and half years away - or may be sooner - the chances of the economy receiving any serious attention are very grim until the formation of the next government. Further, already being in election mode, the government will surely indulge in populist measures doling out largesse that will further dampen the economic outlook. The sum total of all these factors is negative for India and chances of India being among the breakout nations slum to lesser than 50 percent. It will, however, not sink. After all, Gods run this country!
What about tomorrow?
It is a million dollar question. Read "tomorrow" to mean the post-general elections. The lot will depend on the number of seats the two largest parties - the Congress and the BJP - return with. Neither the Congress nor the UPA is likely to form the government on its own but lesser the dependence on alliance partners, the easier it will be for whichever coalition that forms the government to implement measures and policies conducive to providing boost to the economy. Both the Congress and the BJP are pro-reform parties. However, with Sonia Gandhi and her National Advisory Council who are likely to continue to be the dominant factors in the decision making, the Congress will continue to move further left from the center and have more socialist and entitlement agenda. That is not to say that the socialist approach is not good or desirable, particularly for a country like India which still has an overwhelmingly high proportion of its population in poverty. But such an approach should also be accompanied by measures that would also simultaneously boost revenue to sustain entitlement economy without ballooning the fiscal deficit to a point of bursting. How the UPA would balance the equilibrium between its socialist approach and liberal economic policies will decide what trajectory the economy will take. So the percentage will be back to 50-50, which is good but still uncertain.
If the NDA, BJP and its alliance partners, occupy the treasury bench, the outlook appears brighter, and here below is why.
First, the BJP, like the Congress, is a pro-reform party. Second, while it is equally conscious of the fact it can ignore the need for socialist measures only at the risk of its own and country's stability, it is likely to be able push reform agenda more aggressively to augment revenue. Every one knows what reforms and what kind of policies are required to inject new lease of life in the economy. The question is political will and wherewithal to be able to do that. In this respect, the BJP is better placed to be able to push the reforms aggressively because it has been able to so far manage its alliance partners better by adopting greater consultative and reconciliatory approach, which the Congress so woefully lacked, particularly during the UPA II years. Third, and more significantly, the NDA partners are more responsible in their relationship with the BJP and the partnership has matured to become a more cohesive one over a period of past few years, unlike the UPA partners who are pulling the coalition in different directions. So the percentage with the NDA at the Centre will be 70-30 in favor of India being among the breakout nations.
The Third front? A non-starter from the beginning. I am not hazarding any guesswork.
Any Interim Solutions?
Yes. If only the Congress walks across the aisle, sits with the opposition across the table and holds consultations on various policy issues. Yes. If the BJP shows equal magnanimity and shows willingness to discuss and support measures in the national interest. No situation is better for our country then bipartisan approach to address pressing issues for the nation.
Which way will it go? Some reflections -
Looking at it today, the Indian economy is drifting rudderless. The current government is embroiled in all sorts of problems - from allegations of massive corruptions in CWG, spectrum and coalmines allocations to managing its errant coalition partners and floor of the Parliament. It is left with little time and inclination to focus its energy on setting the sail right to arrest the drift in economy and steer it forward in the right direction. With the general election just one and half years away - or may be sooner - the chances of the economy receiving any serious attention are very grim until the formation of the next government. Further, already being in election mode, the government will surely indulge in populist measures doling out largesse that will further dampen the economic outlook. The sum total of all these factors is negative for India and chances of India being among the breakout nations slum to lesser than 50 percent. It will, however, not sink. After all, Gods run this country!
What about tomorrow?
It is a million dollar question. Read "tomorrow" to mean the post-general elections. The lot will depend on the number of seats the two largest parties - the Congress and the BJP - return with. Neither the Congress nor the UPA is likely to form the government on its own but lesser the dependence on alliance partners, the easier it will be for whichever coalition that forms the government to implement measures and policies conducive to providing boost to the economy. Both the Congress and the BJP are pro-reform parties. However, with Sonia Gandhi and her National Advisory Council who are likely to continue to be the dominant factors in the decision making, the Congress will continue to move further left from the center and have more socialist and entitlement agenda. That is not to say that the socialist approach is not good or desirable, particularly for a country like India which still has an overwhelmingly high proportion of its population in poverty. But such an approach should also be accompanied by measures that would also simultaneously boost revenue to sustain entitlement economy without ballooning the fiscal deficit to a point of bursting. How the UPA would balance the equilibrium between its socialist approach and liberal economic policies will decide what trajectory the economy will take. So the percentage will be back to 50-50, which is good but still uncertain.
If the NDA, BJP and its alliance partners, occupy the treasury bench, the outlook appears brighter, and here below is why.
First, the BJP, like the Congress, is a pro-reform party. Second, while it is equally conscious of the fact it can ignore the need for socialist measures only at the risk of its own and country's stability, it is likely to be able push reform agenda more aggressively to augment revenue. Every one knows what reforms and what kind of policies are required to inject new lease of life in the economy. The question is political will and wherewithal to be able to do that. In this respect, the BJP is better placed to be able to push the reforms aggressively because it has been able to so far manage its alliance partners better by adopting greater consultative and reconciliatory approach, which the Congress so woefully lacked, particularly during the UPA II years. Third, and more significantly, the NDA partners are more responsible in their relationship with the BJP and the partnership has matured to become a more cohesive one over a period of past few years, unlike the UPA partners who are pulling the coalition in different directions. So the percentage with the NDA at the Centre will be 70-30 in favor of India being among the breakout nations.
The Third front? A non-starter from the beginning. I am not hazarding any guesswork.
Any Interim Solutions?
Yes. If only the Congress walks across the aisle, sits with the opposition across the table and holds consultations on various policy issues. Yes. If the BJP shows equal magnanimity and shows willingness to discuss and support measures in the national interest. No situation is better for our country then bipartisan approach to address pressing issues for the nation.
No comments:
Post a Comment