There is no gainsaying the fact that regardless of who forms the government after the elections, the priority should be to get the economy closer to the intended trend line of 8%-plus annual growth rate as early as possible.
The economy, which till recently was touted to emerge as a regional titan rivalling China, is now snowed under with a raft of problems. Most analysts reckon that the turnaround of the economy is unlikely to follow a steep V-shaped path.
According to a recent report by Crisil, the Indian economy has an even chance of expanding at an average of 6.5% annually over the next five years. Given the economy’s average annual expansion of 6.7% during the past five years (2009-14), Crisil’s forecasts suggest a steep turnaround wasn’t likely anytime soon — a sign that the slowdown is stickier than earlier thought.
Slower expansion will affect hiring and job prospects. Weak income growth, on the other hand, will also affect sales of a range of goods — from cars to two-wheelers, from houses to cement and steel.
Households putting off spending are early warning signals for the onset of an economy-wide squeeze. Elevated prices have hurt family budgets hard. Besides, high inflation has prompted the Reserve Bank of India to raise lending rates.
Politicians are aware about how dire the problem is. That ‘growth models’ have become an electoral issue, not just in prime time TV discussions, but also in rallies and street meetings, brings home the point tellingly.
Poverty, growth and jobs have become the centrepiece of India’s political discourse — a welcome and progressive departure from only the shrillness of the divisive caste-religion discussions usually heard in an election year in India.
Growth models, redistribution, development paradigms and employment opportunities — the poll phraseology has seen a significant metamorphosis over the last few months. Each party, depending on its ideological predilection, has recognised that the economy as a problem.
In 1992, similar circumstances had prompted Bill Clinton’s campaign strategist James Carville to coin the phrase “it’s the economy, stupid”, underlining the need to take hard decisions to deal with an embattled economy. The phrase rapidly evolved into the de facto slogan for Mr Clinton’s presidential poll campaign.
Nearly a quarter of a century later, India finds itself in similar circumstances. Experts, ranging from the far Left to the extreme Right, have offered their solutions on how to deal with the crippling crisis. These dialogues have expanded the scope of discussion, ushered in contrarian views, and added to the body of thought that the next government can, and should, draw upon. There is some merit in all strands of thought.
The challenge is in choosing the least painful and the most gainful policy matrix.