March 25th, 2009 Vandana Gombar
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What is the reason for India’s declining growth rate?
It is the ripple effect of the global financial crises and the follow-on global economic downturn.
(Read: We are not responsible).
What is the reason for the healthy growth in the first few years of this government?
Here is what finance minister Pranab Mukherjee said in his budget speech last month: “For the first four years of the UPA government, our policies ensured a dream run for the economy with GDP recording increase of 7.5 per cent, 9.5 per cent, 9.7 per cent and 9 per cent from fiscal year 2004-05 to 2007-08.
(Read: We are responsible).
What if we were just enjoying the fruits of the global economic boom in the first four years of this government and are now suffering the impact of the global economic slowdown!
(Read: Perhaps the impact of policy has been limited in either direction - upward or downward)
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March 25th, 2009 at 7:57 pm
One could argue that the bubbles in America found outlets in India, among many other countries. The government could have stopped the froth — which thankfully it did not — and that allowed us the impressive growth rates. According to one view, these growth rates reflect a missed opportunity, rather than accomplishment. If the government had actually been proactive, we would have made the best of the good times and touched double digit growth in boom time. To take credit for what was coming our way anyway, is not entirely justified in my view. Of course, there can always be multiple views on the issue.
March 25th, 2009 at 6:31 pm
Entirely possible, but upon proper reflection, that is not the case. Sharp downturns, especially those sparked by an implosion in some sector such as finance with knock-on effects like trade credit freeze-ups, as a rule, are much more transitive across economies (than are sharp upturns); globalisation operates in a series circuit, a single bust putting everybody connected on the blink (banking-restrained and capital-controlled India is only partially linked and has escaped the worst ravages of America’s wanton monetarism, incestuous i-rates and over-credit-kill, even if a few US diehards would have you believe otherwise). But the reverse circuitry does not hold (empirically or theoretically), a single success not necessarily making everybody succeed. True, lower global capital costs during the boom phase had an impact, but India’s savings/investment boom is traceable more distinctly to a combination of fiscal finesse and tigerish spirits, both of entirely indigenous engineering, and the reason the East can plausibly lead a recovery. Genuflection before the Wise West and dyes cast is completely uncalled for.