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Growth rate in the Indian economy, and whether the Government has given up on reform ..




For some time now, the Government has been facing trouble in trying to take policy decisions in the area of reform. For a quick history lesson, consider this: In the time period between 2004 and 2009, in the time when UPA-1 was in power, the Congress was in a minority, and depended on a number of parties for support, including the Left, and numerous other parties. Some of these extracted their own pound of flesh, while the Left refused to allow a lot of economic reform, but finally drew the line at the Indo-US nuclear accord. And then came the 2009 elections. In this election, the Congress got an enhanced majority, the BJP did not get much of support, and the Left sort of faded away. The PM made all sorts of announcements about reform, including 100 day targets.
And where are we now ? We have a Government that is in paralysis, where scams and the resultant outrage forcing investigations that are revealing corruption wherever the investigation has touched, leading to a Government, under a supposedly clean Prime Minister, that is known to be the most corrupt Government ever. The list of scams that have come out involve huge sums such as the 2G scam, the CWG scam, and so on. In addition, scams over property, coal allocations, satellite spectrum, and so on are promising a regular spate of problems to the Government. The BJP also is coming out to not be a party with a difference, since the experience in Karnataka is threatening to bestow a corruption tag onto the BJP that the party is not able to overcome.

And with all this paralysis and the corruption scams, the allies are able to extract their own pound of flesh; consider the stranglehold that Mamta Banerjee is exercising on the Government and its policies, whether these are internal reform, or even related to external affairs such as the proposed accord on Teesta water sharing with Bangladesh. Other Chief Ministers are also striking back, and one cannot even say that this is something that this Government does not deserve. If you reflect back on the agitations by Ramdev or Anna Hazare, the arrogance of the central ministers such as Kapil Sibal, Chidambaram, etc was incredible – it almost seemed like the smirk on their faces was an insult to the citizenry of the country. The elections of the last couple of years are showing a response back to the Congress that is showing that the people are voting for the Congress with their feet, with even elections that were there for the winning being lost, especially in urban centers.
Now, a confirmation of the helplessness of the Government was expressed pretty clearly by the Chief Economic Advisor to the Government who stated facts that would have caused great embarrassment to the Congress and the Government, and was forced to backtrack to some degree (link to article):

Addressing a meeting at the Carnegie Endowment for International Peace on Wednesday, an eminent Washington-based thinktank, Basu said that relatively less important bills might go through Parliament. After 2014, he said, “you would see a rush of important reforms” and after 2015 India would be one of the “fastest growing” economies of the world. The new government, if in a majority, would start with the reforms in a big way because there is a sense that it needs to pick up, Basu added.
Kaushik Basu said there is a slowdown in decision making. The unearthing of a series of corruption and scams, he argued, is having its own impact on the psyche of the bureaucracy, that is not willing to take risks.

What the Government is doing is to threaten the image of India as a country not ruled by laws, where a Supreme Court judgment is sought to be over-ruled by the Government so that it can garner more revenue, only to lose huge chunks of it through corruption.




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