Farewell to Incredible India

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Farewell to incredible India

India's growth rate has fallen to 5.3% may not seem important. But the rate is the lowest in seven years, and the sputtering of India's economic miracle carries social costs that could surpass the pain in the euro zone. The near double-digit pace of growth that India enjoyed in 2004-08, if sustained, promised to lift hundreds of millions of Indians out of poverty—and quickly. But now, after a slump in the currency, a drying up of private investment and those GDP figures, the miracle feels like a mirage. Whether India can return to a path of high growth depends on its politicians—and, in the end, its voters. The omens, frankly, are not good.

The Congress-led coalition government, with Brezhnev-grade complacency, insists things will bounce back. But India's slowdown is due mainly to problems at home and has been looming for a while. The state is borrowing too much, crowding out private firms and keeping inflation high. It has not passed a big reform for years. Graft, confusion and red tape have infuriated domestic businesses and harmed investment. A high-handed view of foreign investors has made a big current-account deficit harder to finance, and the rupee has plunged.

A combined budget deficit of nearly a tenth of GDP must be tamed, particularly by cutting wasteful fuel subsidies. India must reform tax and foreign-investment rules. It must speed up big industrial and infrastructure projects. It must confront corruption. None of these tasks is insurmountable. Most are supposedly government policy

Why, then, does Mr Singh not act? Vacillation plays a role. But so do two deeper political problems. First, the state machine has still not been modernised. It is neither capable of overcoming red tape and vested interests nor keen to relax its grip over the bits of the economy it still controls.

Second, as the bureaucracy has degenerated, politics has fragmented. The two big parties, the ruling Congress and the opposition Bharatiya Janata Party (BJP), are losing support to regional ones. For all the talk of aspirations, voters do not seem to connect reform with progress.

It does not help that the ageing Mr Singh has little clout of his own: he reports to the ailing Sonia Gandhi, the dynastic chief of Congress. With a packed electoral timetable before general elections in 2014, Congress does not want to take risks.

Is it time for a change at the top? Mr Singh has plainly run out of steam, but there are no appealing candidates to replace him. Mrs Gandhi's son, Rahul, has been a disappointment. What about a change of government? The opposition BJP is split and has been wildly inconsistent about reform. Its best administrator, Narendra Modi, chief minister of Gujarat, is divisive and authoritarian. If it formed a government tomorrow, the BJP would also have to rely on fickle smaller parties.

Some reformers pray for a financial crisis that will shake the politicians from their stupor, as happened in 1991, allowing Mr Singh to sneak through his changes. Though India's banks face bad debts, its cloistered financial system, high foreign-exchange reserves and capable central bank mean it is not about to keel over. A short, sharp shock would indeed be useful, but a full-blown crisis should not be wished for, because of the harm that it would do to the poor.

Instead the dreary conclusion is that India's feeble politics are now ushering in several years of feebler economic growth. Indeed, the politicians' most complacent belief is that voters will just put up with lower growth—because they supposedly care only about state handouts, the next meal, cricket and religion. But as Indians discover that slower growth means fewer jobs and more poverty, they will become angry. Perhaps that might be no bad thing, if it makes them vote for change.

 

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the dreary conclusion is that India's feeble politics are now ushering in several years of feebler economic growth.

This must be avoided if we as a nation have to progress.

The politicians' most complacent belief is that voters will just put up with lower growth—because they supposedly care only about state handouts, the next meal, cricket and religion.

This is the reason why as a nation we have leaders who do not perform and are only interested in lining their pockets.

 

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When the times are bad, the bad news just keeps on pouring in deluge.The economic date coming out is still worrying and the pressure of inflation is still very high. Globally the economic situation also does not help, but with the commodity prices easing it should provide some respite to the economy.

With the exit of Pranab Mukherjee coupled with the PM taking over the reins of the Finance Ministry, there was a feeling that the situation would improve.After an initial pep talk to the nation by the Hon. Prime Minister, the markets reacted positively, the INR gained strength against the Dollar, IKEA and Coke came forward with huge investment plans. FIIs were net investors after many months. It looked as if the situation was improving but then as has been the case for the last few years, the Govt. has again started giving negative signals.

First off the block were ministers like Jairam Ramesh and Anand Sharma, with outlandish statements aimed at 10 Janpath and their eyes fixed on the chair of the Finance Ministry.Each of them with their own regressive ideas of running the Indian Economy.

Next in the queue was our Prime Minister with an interview in the pet Congress journal, the Hindustan Times. the interview was one big contradiction, he started off rooting for liberalistaion, then he meandered off whether it was working or not. As First Post noted the interview was more aimed to please Madam Sonia. His attempt to brush the rampant corruption of the last 5 years was even more pathetic.

The next claimant to the FM's post was off the block yesterday. Our Home Minister, seems to be more interested in shifting offices than tackling the problems in the country. If his swipe at the middle class's fondness for mineral water and ice cream is any indication, the PM would do the nation a great service by keeping him away from the North Block.

The Salman Khurshid interview with Indian Express and the speed at which the minister was forced to recant his interview, highlights the conflicts in the ruling party. Dissent has never been favourably looked at by Indian Political parties, but the points raised by the minister need to be addressed by the GOP, because at the end of the day, they are impacting on the governance of the country, and this continued drift is detrimental to the health of the country.

Our principal opposition party has also abdicated it's responsibilities due to their own internal bickering. The current economic conditions were godsend to put the ruling party on the mat. They have failed in this miserably. It was their job to keep the ruling party on their toes, but they have squandered away all opportunities. The Finance Minister in two successive budgets, presented sets of fudged budget figures, all the leading pink newspapers pointed it out but did we hear any discussion in the parliament. No. They were all busy raising ruckus on petty issues.

First and foremost the PM must reach out to the opposition parties after the Presidential elections are over, and must reach a broad understanding on the path and direction that must be taken to revive the economy. Being in power they will have to bend more, appear to give more and come to broad agreements. GST and DTC are the prime examples. the banking and insurance bills for which BJP is already in support should be passed immediately.This in itself will be a very powerful signal to the outside world at large and will definitely have a big impact.

The second task for the PM is to stand up to Sonia Gandhi and her NAC. New Social Welfare programmes should be put on hold and the focus should be on the existing programmes. The efficiency of the current programmes must be measured, the black holes where the money disappears should be plugged in. If need be the Welfare Programmes should be tweaked to deliver better results. Only when the economy is in better position, the fiscal deficit is under control, then we should have new welfare programmes.

Time is running out for the Congress party and more importantly for the nation. We the citizens of the country demand results, we owe this to our future generations, to hand over a rich, prosperous and powerful nation.

 

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Moody’s cuts India growth forecast, says govt lost its way | Firstpost

In a scathing remark on the goings on in the Indian political economy, Moody's Analytics has said the government has lost its way, and cut slightly the growth projections for the country. While the growth estimate cut is not significant the language used to explain the rational is, as it sees as it sees "little on the horizon to lift growth".

Moody's Analytics cut India's GDP growth forecast for 2012 and 2013 slightly to just above 5.5 percent and 6 percent, respectively, citing a sharper-than-anticipated and broad-based slowdown and poor monsoon.

some of the points highlighted in the report are

Confidence among Indian firms has been crushed by weak demand, elevated interest rates, high inflation, and most significantly, the instability created by a weak central government that has badly lost its way," it said.

There has been little policy response from either the Reserve Bank of India or the government and with global uncertainty dragging on, we see nothing on the horizon to lift the economy from its funk,

the recent blackout that pushed half of the country's population into darkness is "the most graphic illustration of the infrastructure woes and regulatory headaches that Indian firms"

With two years left in office, PrimeMinister Manmohan Singh must turn things around quickly or risk becoming a lame duck for the remainder of his term, leaving behind a legacy of missed opportunity.

 

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The Indian Growth story is being hit hard. The latest is the report by Citibank and CLSA who have trimmed the GDP growth to 5.4%

Now Citi, CLSA trim India’s growth to 5.4% | Firstpost

The stars just don't seem to be aligning for India, with almost all the growth drivers being hit"¦the government needs to get down to serious business with more action to stem a further deceleration in growth," a note from Citi said, adding that it is scaling down its FY'13 growth estimate to 5.4 percent from the earlier 6.4 percent.

the global brokerage firm CLSA also cut its GDP growth estimate to 5.5 percent from the earlier 6 percent, stating, "The revised forecast assumes lower growth of zero percent (from a "normal" 3 percent) for the agriculture and allied sector."

Both the Brokerage firms do not rule out a further downward revision of the GDP figures based on the progress of the monsoon.

 

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Industrial production goes into negative zone in June. Exports too register a fall

June IIP contracts 1.8% on weak investment, falling exports

India's industrial output contracted for the third time in four months in June, increasing pressure on new Finance Minister P. Chidambaram to move quickly to pull Asia's third-largest economy from its worst slowdown in almost a decade.

The contraction provided further ammunition to the slew of private economists who downgraded their growth outlook for India this week, citing a worsening drought and political hurdles to economic reform.
It highlights continued softness of the Indian economy amid contracting exports and weaker domestic demand," said Dariusz Kowalczyk, an economist with Credit Agricole CIB in Hong Kong.

Capital goods, a key investment indicator that has shown growth only once in the past 10 months, slumped 27.9 per cent in June, data showed.

 

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This must be avoided if we as a nation have to progress.



This is the reason why as a nation we have leaders who do not perform and are only interested in lining their pockets.

Sometimes I wonder Politicians and Leaders are the Words used to Carpet Sweep the Doings of the Congress in the Last 65 Years.

Why not use Congress?