POLITICONOMICS

At present India is undergoing a downfall phase be it Political or economic scenario. Recently concluded civil society movements led by Anna Hazare, Ramdev and supporters even challenged to throw out the government in the next election of 2014. However, it is the “Time” which will decide the fate of the government or the country. But, it is the general public or the so called “Aam junta”, are the real victims in such situations. The political instability leads to the slowdown of economy because investors prefer to invest in those countries having solid political platform. Perhaps, it is the main reason (no doubt there are other reasons also) for having less foreign investment in India for this fiscal year. Since we are in a phase of globalisation, the “negative mood” of investors have serious impact on the economy of our country. The fiscal deficit increases and may get out of control at some point of time. The very recent “power crisis” in 21 states affecting nearly 60 crore people across the country is the result of political failure. The 2G scam, the coalgate issue, Adarsh Housing Scam etc. have added to the sufferings of the people of our country. The negative impact of consistent increase in price (inflation) of very basic commodities on the middle class goes without saying.The ongoing issue of North-Eastern people in which around 4 lakhs became homeless, 77 had lost their lives (as on 8th august), have just added to the list of miseries for the people of our nation.

What about the economy?

In the last fiscal, the GDP was 6.5%. But, the present scenario and the predictions of economists suggest that in the fiscal year 2012-2013, the expected GDP will be around 6%. The “Credit Rating Agency” namely Fitch, Standard & Poor even threatened to downgrade the India's sovereign credit rating to ‘speculative' from the lowest notch of ‘investment' grade. It even predicted the growth of India in the next fiscal to be 5.5%. However, being positive, the Chairman of Prime Minister Economic Advisory Council (PMEAC) C Rangarajan projected it to be 6.7%, which was also believed by our PM Dr. Manmohan Singh. Price rise at the time of lower growth adds to the woes of the nation. RBI Governor Dr. D Subbarao believed that inflation is the key at the present situation and hence he is not in the favour of reducing rates such as CRR (Cash Reserve Ratio). He believed liquidity is not the barrier for the growth at present but it is the investors’ negative sentiment, infrastructure inadequacy etc. which comes under the purview of government policy. So, the responsibility lies with the government to tackle the situation to bring back the growth chain on the track.

What needs to be done?

The situation cannot be tackled just by increasing foreign investment or reducing bank rates, but it should be a long-term plan. Infrastructure improvement like roads, railways, ports, airports etc. needs to be looked upon and we need many Golden Quadrilaterals (60,000 cr) type project to connect the entire nation. Electricity, power are some other requirements. Manufacturing growth is the crucial tool. India's GDP is mainly based on service sector, but, in the long run, we need manufacturing sector to play more important role. But, for it to have sound growth, we need power connections everywhere. Many small and medium scale industries cannot afford to have “automatic power plant” which can supply power to them in case of power cut because of huge investment. It goes without saying that corruption is also a factor for the instability of the economy. According to a reader, Corruption is like a “Tax” which goes to the private players instead of the government and in the way increases the price of goods. But, saying is much easier than doing. Before criticizing the government, we should also look upon our responsibilities as a citizen. We are also responsible for wastage of power, water and other resources of our nation. Hence, at all levels, the whole country has to work together, the citizens has to work in co-ordination with the government (Don’t forget we have the voting rights, hence we are responsible for selecting our representatives) to see a better morning for the coming years, generations to come.