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Competitive Push


A mature and balanced response to Finance Minister Nirmala Sitharaman’s economic revival package announced on 23 August was Auto Tycoon Anand Mahindra’s comment that ‘the willingness to relook at policies is a display of strength, not weakness’. The package addressed the problems being faced by the economy in a detailed and studied manner. Importantly, it walked the fine line between rectifying problems and molly-coddling industry. The government has done what it can, but this is a competitive economy in which poor and outdated models of business will have to give way if internal changes are not undertaken. It is not the task of the government or the consumer to protect bad practices and poor quality products.
There is a shakeout happening not just in India, which despite its potential represents a very small part of the global economy, but also all over the world. Just as a rising tide lifts all the boats, a receding one brings them down. As always, it represents a challenge as well as an opportunity. Instead of expecting things to happen by themselves, or getting the taxpayer to subsidise their inefficiencies, all sectors of the economy need to take the steps necessary not only to survive, but also grow in the future.
It is true that India could have better faced the present global crisis, triggered to a large extent by US President Trump’s desire to rewrite the global order according to his wishes. Excessive protectionism and a lack of competitiveness – begotten of crony capitalism – have made the Indian economy incapable of robust growth. (Seven to eight percent is supposed to be good, but it really isn’t considering the low base in many of the sectors.) Much of the time, the economy has benefited from developments elsewhere. In fact, many were waiting for the ongoing US-China spat to transfer business to India, but did not actually take any steps of their own to make it happen.
Sitharaman’s ‘stimulus’ indicates exactly this. The government will do what it can to become business friendly, but industry must also work to find its way out of the mess. The experience of the last seven decades has shown that all attempts to shore up the private sector through interventionist policies such as nationalisation have completely destroyed competitiveness, the direct impact of which has been felt by the export sector. The focus should be on giving the consumer value for money and the value of money will go up as a result.