Dr Singh failed to recognise the need to assure the businessmen that the government is serious about creating an environment that will make easier the way people can start and do business
Dr Singh failed to recognise the need to assure the businessmen that the government is serious about creating an environment that will make easier the way people can start and do business
The most significant part of the Prime Minister’s speech at the annual general meeting of Assocham is his admission that India may not achieve the 6.5 per cent growth envisaged in the Budget. Coming from him, it is significant. The IMF has put India’s growth much below six per cent. The PM did spell out the measures that his government had taken, particularly to attract foreign direct investment and arrest the slide in the rupee. But he did not touch the core of the problems, like the fall in industrial production, particularly in manufacturing, the lack of domestic investment and what is being done to encourage it and high food inflation. He put his hopes on a good monsoon to fuel agricultural growth, which is a negligible part of GDP. These issues, along with the huge fiscal deficit, are the main concern of the business and industry communities.
He also failed to recognise the need to assure the businessmen present that the government is serious about creating an environment that will make easier the way people can start and do business. India ranks 132 out of 185 countries in the ease of doing business. Only this week the country saw two parties walk out with a proposed FDI of $12 billion.
The Prime Minister reiterated his concern on the increasing current account deficit but what is worrying is the limited, or inadequate, reading of the situation. Whilst repeating that petrol and gold imports must be curbed on the demand side, he neglected to mention capital goods. He is probably aware that India’s imports of electronic and machinery items is $79.9 billion, which is larger than gold imports. It is imperative that an economist of his repute and as head of government Dr Singh should be more concerned about these and give equal if not more importance to cutting down these imports. And it is in his hands. His government can certainly strategise to create an environment that could see the development of the country’s prowess in electronics and machinery. This would not only reduce the CAD but would unleash a huge number of jobs for the growing armies of unemployed youth, both skilled and unskilled. It would also enable India to become a significant exporter of machinery, electronics and electric equipment from the current negative trade balance.
It would, in all humility, be rewarding for the Prime Minister to get advisers who think out of the box and find new ways of facing the new challenges that confront India. The cob-webbed ideas are just not working for our modernising economy of almost $2 trillion.
