Sustaining growth

Confidence marks India's entry into 2010

The entire media has been focusing this past week on the decade that was, the year gone by, and what lies ahead. The exhaustive coverage of events and trends in newspapers, magazines, websites and on television has left nothing out. All the great achievers have been toasted, the important events analysed, the failures and foibles listed and the major challenges ahead noted. What is interesting about this carpet bombing is its generally upbeat tone. Exactly an year ago, the global crisis had turned expectations bearish. Few had a good estimate of the extent of India’s global exposure and dependence and whether India could “decouple” itself or not. Opinions varied from misplaced optimism to excessive pessimism. Even as the economy showed signs of stabilising, despite the many knocks it took, uncertainty about the outcome of the 2009 elections kept most investors on the edge. The turnaround in the nation’s, and market’s, mood began with the elections in the summer and then the third quarter’s good news on the economy. India enters the new year more confident.

However, if growth has to be sustained and stabilised, the economy and the polity need special attention. The Indian economy may be taking off, but it cannot be placed on auto-pilot and is nowhere near the Rostowian “self-sustaining” growth phase. While both investment and consumption are driving growth, a large part of both are still fuelled by public expenditure. Despite a stable majority in Parliament, the Union government has still not got its act together and seems to lurch from one faux pas to another. The second United Progressive Alliance government has wasted its first six months in office. The government has got bogged down in handling the consequences of avoidable mistakes, like in Telangana. Institutions of governance, from Parliament and the Supreme Court to gram panchayats and urban municipalities, are in need of nurturing and revitalisation. The coming decade will pose even greater challenges than the previous one, even as it offers more opportunities. If Indians have to be able to take advantage of the opportunities, the challenges need to be addressed. India will have its inevitable tryst with destiny, but there’s work to be done.