Politics should not hurt India’s potential as growth hotspot
India’s economic potential can’t be held to ransom by perceptions created by the rough edges of politics.editorials Updated: Aug 20, 2015 00:55 IST
Perceptions play a big role in influencing individual and institutional decisions.
This is more so in the case of investment decisions where billions of dollars are chasing islands of global growth.
When the Narendra Modi-led BJP rode to a landslide victory last year, the mood was one of bullishness and optimism.
The high-decibel campaign promising to usher in ‘achhe din’ had stoked expectations that the new government will soon unveil policies that will help companies add capacity and push growth in the broader economy.
The string of commentaries from investment bankers, think-tanks and credit rating agencies that followed after the polls fuelled expectations even further.
Cut to August 2015, the mood is less bullish. On Tuesday, US credit rating firm Moody’s said that dragged down by the deficient summer rains and slow pace of reforms, the Indian economy will likely grow at 7% during the current year, lower than the 7.5% as forecast earlier.
The latest report comes days after its analytics arm warned that India’s economic prospects faced new hurdles amid falling investments, and medium- and long-term growth would suffer without sufficient and quick reforms.
The change in India’s image has a lot to do with a change in perception rather than downright lack of action. Over 15 months, the government has demonstrated its intent to accelerate reforms and iron out the glitches that hold back investment.
Niti Aayog vice-chairman Arvind Panagariya’s views that India can achieve its true potential growth rate of above 10% by 2019, but the ‘unwillingness’ of the Opposition can act as a hurdle, perhaps also make the same point.
The central long-run question facing India is how to create jobs and multiply income in a sustainable way.
Productive jobs are vital for growth. And a good job is the best form of inclusion.
For that to happen, a bipartisan and collaborative approach is imperative to yield the desired benefits. The proposed goods and services tax is a case in point of how lack of collaborative thinking is holding up a reforms initiative.
Profit maximisation, policy reforms and politics should cease to be mutually exclusive objectives.
India’s potential as one of the hottest growth spots cannot be allowed to be held to ransom by perceptions created by rough edges that have sprouted across the political aisle.