Consultations are on in a big way by the Union Government to prepare a budget that helps pick up the economy. There is a general consensus that the present rate of GDP growth is around 5 percent. Compared to the situation existing in similar economies elsewhere, this is a good performance. However, critics claim that the slowdown is undeniable and, more importantly, due to government policies rather than global factors. The more positive feel that this is a cyclical downturn and a bounce back is coming soon.
All the same, there is absolutely no harm in undertaking a deep appraisal and getting a factual picture of what is happening with the economy. Amongst the most knowledgeable are, of course, those directly involved in the job of making money, be it the ones who run mega-corporations, or the shop owner around the corner. Almost all agree that investment and increased credit flow are required. It is also important to be technologically competitive and up to date. It is a fact that, while the economy was supposedly booming, allocation for research fell far short of requirements, leading to most of the technology, innovations and systems having to be imported. Given the speed with which technology is becoming obsolete these days, the costs also go up exponentially. One needs only witness the ‘crisis’ being faced by the automobile industry – how did the ‘boom’ turn into ‘bust’ so quickly? If one compares costs and quality with foreign made cars, India’s consumers have been literally taken for a ride – it would be cheaper to import than make in India!
The Modi Government’s primary approach from the start has been to dismantle the autarkic policies of the past and shift towards the open market. India’s manufacturing is being sought to be made globally competitive. It is true that the global environment has become more restrictive, disrupting such plans, but international trade will inevitably be renegotiated and India must be prepared for that. The present panic among politicians should not force it into reversing the reform. There is very likely a middle way and, if there is, the present efforts seek to find them. If, however, the choice is between reform and retreat, PM Modi will need to stand firm. He has a strong mandate and should use it despite the recent electoral setbacks at the state level. Hopefully, a consensus is being shaped in the ongoing consultations and will produce good results.