“Do not belittle Indian economy’s growth prospects,” exhorted finance minister P Chidambaram. “Regardless of the government, India will grow at 5-6 per cent. Good governance, efficient use of money and more effective delivery of projects can accelerate growth to 8-9 per cent... The kingdom of journalism needs moderation,” said PC.
After nine years in office, sadly the UPA government is still talking about the prospects of India reaping dividends from its young demography and other resource endowments. Quite disappointingly the deficits in trust, ethics and governance graphically described by Chidambaram, the inability to speed up much needed reforms and to push up production activity by “operationalising 215 stalled projects involving an outlay of Rs 700,000 crore “are still wish lists and dreams with little to show by way of results.
The major issues afflicting the economy are glaring: large fiscal deficits, yawning gap between imports and exports, steep fall in the value of the rupee and high prices. These cumulatively depress economic growth to less than 5 per cent.
One wonders why the UPA government could not accelerate growth in the last four years. Look at some of the issues that are well within the control of the government: containing the huge current account deficit, which touched a $20.1 billion, with continued rise in imports of gold, silver and crude oil. Gold imports reportedly jumped during May to $8.4 billion.
“With imports way ahead of exports, the steep fall in the value of the rupee is hurting the economy badly. In just about a year the rupee has depreciated from around Rs.47 to around Rs.58 a dollar.
“Prices, especially of fruits and vegetables, are an area of serious concern. The inability to control
prices necessitates huge, recurring subsidies. Sadly, the focus on tackling the supply side by attempting quantum jumps in production has been missing.
Despite the fall in crude prices the outgo on oil imports is much higher. The finance minister talks of increasing domestic production of oil and coal as the only way to contain current account deficit. But this effort has been thwarted by lack of decision on fair pricing for domestic production. Gas pricing is the most glaring example of such neglect. The government has frozen the price at $4.20 for million BTU while merrily importing gas even at $16 per million btu. While domestic producers like ONGC and Reliance are forced to keep away from exploration and production of gas, foreign suppliers are allowed to enjoy selling gas at high prices.
It is over three months since the Prime Minister assured speedy clearance of a few hundred projects in which over Rs.700,000 crore are locked. These include crucial projects relating to coal and power.
From Chidambaram to Planning Chief M S Ahluwalia to PNG Minister Veerappa Moily, senior policy makers have been stressing the need for fair pricing of coal and natural gas that will encourage investments, both domestic and through FDI. But little corrective action has been initiated.
All these changes are predicated upon the ability for political management. This calls for regular and continuous dialogue with other major political parties. Sadly this is absent. On the contrary, leaders of UPA have been so quick to decry and denigrate the main opposition party, the BJP. Remember, senior Congress Leader Digvijay Singh and his ilk merrily lampooning Narendra Modi and other BJP leaders over the Goa Meet. How eagerly they tried to drive a wedge between Modi and Advani! The television news medium merrily contributed to this chaos.
So Chidambaram can continue to lecture on India keep growing on for next 40 years regardless of which government is in power.