In 2013, follow up reforms with action
It would not be fair to say that 2012 was an unqualified annus horribilis, though it was a year when precious opportunities were lost. It was the government’s second year of policy inaction and mismanagement at the macro level. The situation did show signs of change towards the third quarter of the year with the Prime Minister talking of the need for “animal spirit” and the new finance minister, P. Chidambaram, announcing a slew of reforms. Unfortunately for all, and particularly the infrastructure and core sectors like power, ports and roads, these have remained at the stage of announcements, and most of them have yet to get off the ground.
The end of the year, however, presented the star-crossed government with another gigantic problem that could act as a dampener for foreign investors and a threat to the female workforce. The brutal gangrape in a Delhi private bus, and the death of the victim, saw India’s image take a beating on a daily basis in the world press and on television. India was seen as the country where the treatment, abuse and torture of women was one of the worst in the world. This could trigger some ethically-oriented funds to think twice before investing in India as there is a trend in the West towards ethical investment related to issues like the environment, child labour, sweat shops etc.
It could also affect tourism as there have been several cases of foreigners, and even foreign students, being raped in the country. The government is still dithering even as the country rises up against its inaction on assuring and taking measures towards the security and equal treatment of women. India is repeatedly seeing its own mini-versions of the “Arab Spring”.
One would think all these developments would act as triggers to spur the government to act on the economic and law and order fronts. So far its record has not been encouraging. But there is hope that the government should be able to bring down inflation so that the RBI can cut its key policy rates in its credit policy announcement at the end of January. There is also hope that the government will finalise the Goods and Service Tax, which alone could raise GDP by two points, the new Direct Taxes Code, and come to some agreement on the Land Acquisition Bill as land acquisition is said to be one of the major factors holding up projects. If there is no agreement on this, the government and industry will have to put their heads together to find a new solution. Industry would have to put its own selfish interests and agendas behind that of the interests of the country: growth and development.
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