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The evil that men do... PDF Print E-mail
Tuesday, 21 May 2013 00:00
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...which is why policy paralysis will be UPA-2’s leitmotif

 

Given the dramatic collapse in the economy over the last four quarters especially—on almost any parameter you can think of, from growth to fresh investments to the current account deficit—it is natural to dismiss the UPA’s ninth birthday tomorrow as just another forgettable milestone. And to a large extent it has been nothing but that, given that once the global growth impetus disappeared—and perhaps the impact of the reforms in the NDA and UPA-1 years—India’s growth also petered out. Apart from the large number of corruption scandals the government has had to deal with under its watch, many of the problems can’t even be blamed on the exigencies of coalition politics. A retrospective tax on Vodafone was not something allies forced the government to legislate. While a case could still be made for getting corporates to pay taxes that they are avoiding, some of the environmental hurdles were of the Congress party’s own making. In other cases, like the oil/gas fields that were auctioned but could not be accessed because of bans by the defence ministry, this was nothing but bureaucratic sloth in not getting the requisite clearances.

The number of such examples can be multiplied and the MGNREGA and the proposed Food Security Bill have to figure prominently in the NAC-driven legislation agenda that has given the government a bad name among the pro-reformers. But any report-card of the UPA-2 would be incomplete if it didn’t look at the other side. It has to be said that a large part of India Inc’s near demise is a result of its own irrational exuberance. In the case of a telco like Bharti-Airtel, unfriendly government policy on intra-circle 3G roaming and absurdly high base prices for the 2G spectrum auction have undoubtedly played a big role in its current problems. But the $9 billion Bharti-Airtel acquisition of Zain is what continues to dog its results quarter after quarter. Ditto for $12-billion Tata Steel’s Corus acquisition. Such examples can also be multiplied manifold. Let’s also not forget the regained momentum of the last few months—on GST, on FDI in single-brand retail and the half steps in multi-brand retail—though it is obvious the fruits of this will only be reaped by the next government. After not doing anything for years, the diesel subsidy has been tackled very successfully, cash transfers have been formally brought on the front burner and a limited beginning has been made on resolving contentious disputes in PPPs in the infrastructure sector. It is unfair to characterise the UPA-2 only by the fall in GDP growth to 5% or the rise in the CAD to 5.1% of GDP. Gross FDI inflows are off their FY09 peak of $41.8 billion, but at $36.9 billion in FY13, they are not awful either—at $27.3 billion, FY13 FII inflows are just $2 billion short of their FY11 highs. The evil that men do…

 
 

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