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Economy needs leadership

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No matter how many lawyers one has on one’s team to put a
spin on things, it is the economy ultimately that provides the necessary dose of reality. Government statistics announced on Tuesday reveal that GDP growth is going to be, at 6.9 %, the lowest this fiscal in the past three years – encompassing basically the entire tenure of UPA-II. Even though government has acknowledged that the failure to implement crucial economic reforms was a major factor in bringing down the growth rate, it has attempted to also blame global conditions for the slowdown.
How different are these stark figures to the rhetoric being heard on the election trail in UP, where it is being claimed that the ‘Centre’ has been doing magnificently well in taking care of the people’s needs, and it is all the state’s fault in not keeping up! The fact is, at the core of India’s present day problems is the slowdown in the economic momentum and the failure of the government to take the necessary steps at the right time. The UPA has blamed everybody and everything else except its own leadership for the lack of success – on top of the list being ‘compulsions of coalition’. If it was the Left that was blamed earlier, it is now the Trinamool Congress, the NCP, the DMK and sundry others.
Even as the government has been fire-fighting on the political front in the bid to keep its electoral clout intact, it has dangerously ignored crises in the economy. Action has been taken only if things have gone completely out of control. This neglect has meant that institutions and sectors that have taken decades to develop, often due to the brilliant efforts of individual entrepreneurs and forward looking policies, have gone into decline to the point of complete collapse.
One such, for instance, has been the civil aviation sector, which was developed assiduously to meet a long felt economic and strategic need. The policy attracted a number of private sector companies to make long term investments in the expectation that the pent-up consumer demand would be an opportunity for diversified growth. Instead, the sector began to be treated like yet another private fiefdom by a succession of Civil Aviation Ministers, and a whimsical and uninformed strategy adopted. All it required was corrective action every time a problem emerged, but this was not done. Instead, investors were continually invited to invest, be it in airports and related infrastructure to establishing airlines. The implied promise was government support, but it was belied. Even logical pricing and taxation structures were not developed.
It is only when the situation goes completely out of hand that action is taken in the form of a ‘bailout’, when timely ‘enabling’ investment would have proved much cheaper. The decision to allow direct purchase of aviation fuel, for instance, could have come much earlier and would have prevented an airline like Kingfisher from going deeper into the morass. Similarly, Government ought to treat Air India like an independent corporate entity, to sink or swim with the rest of them. If it must take steps, it must do so for the entire aviation sector. The sector needs to be boosted, but on an equal basis.
The same goes for managing the nation’s other assets, such as the Railways. Economic policy should be geared to encouraging growth, instead of creating massive holes in the budget through politically motivated and outdated subsidies, or welfare programmes designed to ‘include’ the weaker sections, but which only succeed in promoting unprecedented levels of scams as has been seen in the case of NHRM, MNREGA, etc. A country like China is utterly shameless in ‘arranging’ prices and controls in a manner that provides it advantages in the global economy. India, on the other hand, prefers to tie itself up in red-tape to ensure that even the little competitiveness it has, is lost.
There is no doubt that the short-sighted pandering to ‘vote-banks’ costs India enormously in terms of growth and development. Even as the economy slides, its ratings drop, and established institutions near collapse – freebies, sops and concessions continue to be promised left, right and centre. All these promises are being made in the belief that the economy will continue to grow by some ‘miracle’. It is true that the Indian people have developed with little help from the government over the years, but deliberate policy decisions and neglect that have an adverse affect will have an impact. If even this cannot be avoided, it is time for a more ‘clued-in’ leadership to be brought to the fore. India cannot afford not to.