There is a cycle in Indian affairs. Every so often, there is a renewed energy, an ambitious reform, a new purpose. Things change, growth accelerates. This lasts about five years or so. Then something happens and torpor sets in again. The period between 1953 and 1959 was like that. The Second Five Year Plan, all those big dams, non-alignment and Panchsheel, Panditji dominant and benevolent. Then in the next 10 years there was the defeat by China, Plans had to be pruned, two famines.

There was a similar outburst when Indira Gandhi split the Congress. For five years between 1969 and 1974, there was tremendous energy in her activities and a lot of hope. Then came the people’s movement in Gujarat against inflation, her defeat in the Courts, the Railway strike which was smashed up and then Emergency. Again in the mid-eighties, there was an élan, the economy advanced. Rajiv was the new hope but he too fell by the wayside with Bofors and Shah Bano. Then again, darkness till the mid-nineties, followed by the nightmare of United Front rule, and, again at the turn of the century, resurgence.

I fear we have come to the end of the good period now. Growth has been good, but now it is slipping away. While growth was good, Indians began to take it for granted and populist redistribution became the fashion among political parties. It used to be development with inclusion; now it will be inclusion and no growth. Why?

There is now a 75 per cent chance that next year the world economy will be in recession. OECD will enter negative growth territory. This will be the case despite the success of Brown-Paulson intervention to recapitalise banks. It is not that Capitalism has ended (no such luck) but that it will take time to rejuvenate. Investments will not flow from the rich countries to the poor, nor will the consumption of rich countries fill the coffers of exporters in the developing countries.

... contd.