Wake-up call for the long haul
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Surely, Prime Minister Manmohan Singh did not wake up on Tuesday morning to a rude surprise of his own Plan panel pointing out that India's growth rate could slip to about 5 per cent in the next couple of years. Deputy Chairman of Planning Commission Montek Singh Ahluwalia must have definitely shared a brief about the three scenarios that his team is going to present in the full Planning Commission meet this Saturday.
Having said that, one must give it to the Plan panel to have pulled the cat out of the bag and tell all in the government that the situation is grim. Often criticised for printing bulky volumes of five-year Plans over the last many decades, the Planning Commission seems to have taken a different approach in drafting the Five-Year Plan starting this financial year.
One would now like to imagine that Yojana Bhawan pundits have rolled up their sleeves and got down to the nuts and bolts of this policy logjam. It is learnt that the over-riding theme of the 1,000-page draft Plan document that is split into three volumes is the "mis-trust" that people have in the very process the government adopts to address issues. This is a fundamental problem and digs into the core areas of governance, accountability and transparency that any polity must provide.
For example, a big reason for the dramatic growth slowdown is power plants not getting coal. Even if they did get the needed fuel, power producers are unable to sell electricity at a remunerative price because India has largely bankrupt buyers – the state electricity boards. So, making fuel available through a transparent process and reforming the distribution end are critical for growth. The nuts and bolts therefore are how to sort these two issues out.
Having said that, it is also true that policy logjam is as much about a freeze in government decision-making that we haven't seen for decades as it is about a negative sentiment that has engulfed much of Corporate India that has stopped investing. And the latter is often extremely volatile in India. It is largely upon the government to take quick decisions to change the sentiments and give an immediate boost to the economy, but in the longer run, India must start taking fast and giant steps to evolving a transparent and just governance regime.
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