Sunday, September 30, 2012

The Perfect Storm


The Perfect Storm

The lead feature titled "Perfect storm that shook the PM" (Telegraph, 29 Sept. 2012) paints a grim picture of India's economic situation. The chart accompanying the report provides a summary of the stress factors and the prescription suggested by the Vijay Kelkar panel. Whether it's politically inconvenient or not, it's pretty obvious that, if the right medicine is not administered at the right time, the diseases will not go away. Whoever is in charge of running the government must bite the bullet at some point in time or face the "Perfect storm", sooner or later. However, I am surprised at the fact that the "prescription" fails to recommend the abolition of tax waiver on agricultural income, abolition of farm subsidy and  the supply of free electricity in some parts of the country. When the times are tough, why shouldn't every section of the society sacrifice equally?  Holy cow syndrome?

I agree with the statement in the report that "it is hard to immediately see the parallels with 1991". But it is not "because the data points are difficult to compare". It is because the current economic and fiscal trends in India, and the possible consequences thereof, should be compared with those obtaining presently in some of the European countries, especially Greece and Spain. These countries should hold a mirror to our political class, because comparison with Europe would make more sense than with 1991. It would then be very clear that if half-hearted measures or no action is taken, India is certain to go the way these countries have gone. The hardships for the common man would then be even more difficult to bear, the political consequences more bitter and unmanageable. Fortunately, we still have time for the necessary course correction. 

We have a fair idea why some of the European countries are facing severe hardships today, and why some of them are on the brink of bankruptcy. But global situation notwithstanding, no "prescription" is complete without identifying the causes of the disease. Surely several reasons for bringing the country to this dangerous state must also lie at door step of our government too? Where did the Indian planners and the successive governments go wrong? The citizens of India, who are always being asked to make sacrifices, deserve to know what has brought India to this "do or die" situation. Would someone please tell us the reasons?

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