Get moving

It is not difficult to see why India is being mocked as the place where “the plane never takes off”. India’s economy and governance didn’t land in this sorry state overnight; we had been getting here ever since UPA 2 stopped,paralysed in its tracks,unable to budge on much-needed economic reforms and losing its better judgement on political bottlenecks. The GDP figures for the first quarter of the current fiscal are the writing on the wall for the government. At 7.7 per cent,India not only grew slower than the 9 per cent in last fiscal’s corresponding quarter,but demonstrated how continued policy paralysis at home and global economic pessimism have put the brakes on the India story.

Under the circumstances,what can still be done and what,anyway,must be done is reform. At the heart of the faltering India story is a weak manufacturing sector in no position to accommodate jobs,but which must be revived to set our economic trajectory right again. But for that,fundamental reforms,such as land acquisition and transparent environmental clearances,must be in place. Moreover,investor-confidence in India is noticeably low at the moment,with much more money flowing out than in. The Hydra threatening the government is not just inflation and the fiscal deficit but,simultaneously,the challenge of growth. All of this is compounded by the general fact and perception of corruption and uncertainty,as entrepreneur Deepak Parekh lamented in ‘Walk the Talk’,published in this newspaper on September 6.

The time an investor spends suspended in apprehension,acquiring multiple permits and licences,or the archaic tax laws industry must navigate don’t speak of a fast-growing,cutting-edge,21st century economy. These are redolent of the licence raj which refuses to disappear because government still sustains it. That is exactly what’s stalling disinvestment of PSUs. The single instance of the money being wasted on Air India’s losses marks this misdirection of effort and resources. If the fiscal deficit is not contained,India’s rating could come down in November,as Parekh warns. To say the full picture is grim is an understatement,but the only way out is for government to open the door to reform.