Are the days of high flying economic growth for India over?
According to the latest statistics, the economy grew at a mere 5.3 percent in the last quarter. But despite attempts on the part of India’s policymakers to attribute this anemic performance to the current financial woes of much of Europe, the real sources of economic slowdown can be traced to domestic sources.
The ruling United Progressive Alliance (UPA) coalition government appears to be utterly adrift. Several of its members have been implicated in a raft of corruption scandals. One could argue they’ve hobbled much-needed “second generation” economic reforms. The president of the Congress Party, the principal component of the coalition, Sonia Gandhi, has shown no willingness to terminate a host of expensive populist programs and a wealth of subsidies.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
Finally, an aging prime minister, Manmohan Singh, seems almost entirely focused on foreign policy issues despite his impeccable credentials as an economist and the person most responsible for the initial wave of economic liberalization. Blue chip Indian companies weary of the lack of domestic policy direction, meanwhile, are now increasingly investing abroad. To compound matters, the principal parliamentary opposition, the Bharatiya Janata Party, is equally bereft of ideas and initiatives and seems content to simply act as an obstructionist force.
With the prospect of continuing turbulence in global markets, an inability to tackle endemic problems of corruption, mismanagement and a loss of policy direction, India’s immediate prospects for both growth and poverty alleviation suddenly look rather grim.
Worse still, with national elections looming in 2014, it’s unlikely that the UPA will gird its loins and move with dispatch to tame unreliable allies, rein in populist spending and clean its Augean stables of the stench of corruption. For the foreseeable future, India may find itself in rather dire straits.