Posted by: Shiv Muttoo | May 26, 2009

It’s Now or Never


Following the meteoric rise and even more dramatic decline of the global financial framework, scores of learned economists and other such miscellaneous clever people all armed with the benefit of hindsight have fallen over themselves to explain what hit us and why. As we all know very well by now, the American consumer stopped saving and leveraged his earnings to craft a humungous house of cards that financed world growth for a few years. From now, however, the concoction created by this magical leverage can only move in one direction, as delinquencies/foreclosures continue unabated over the next few years and new credit is harder to come by. America could now go the Japanese way, a somnolent Rip Van Winkle economy, somewhat scary but not entirely unlikely. Data suggests that per capita GDP in the land of plenty is already at 2005 levels after just two quarters of economic contraction. And the now famous stimulus package has largely passed personal debt into Government hands. A modern day Robin Hood story, if there ever was one, but clearly only postponing the inevitable.

In this scenario of gloom, India more than any other country has the opportunity of a lifetime to ‘decouple’ itself from the sleeping giants of the western world and drive ahead on the road to prosperity. The reins however are in the hands of a group of people who have spent the last five years somehow keeping their motley crew of disgruntled alliance partners on their side and driving a populist bandwagon rather than using buoyant market conditions to break the shackles off the economy. And in the hands of a political outfit which has presided over our generally apathetic state over the last 60 years. Several economic powerhouses emerged around us from the ashes of crippling war and imperialist subjugation to drive prosperity to their people. India however continued to lumber along at the famous Hindu rate of growth, polarizing economic well being in the hands of a select few. No wonder that our minds boggle as a Korean leader takes much too much responsibility of the disrepute that his actions may have caused, all for a mere $ 6 million (that much does not even qualify as a scam here!).

But take heart. Let’s give our dream team yet another chance. Let us not blame them for the sins of commission but more often omission of their fathers. Armed with U.S. university degrees and intricate lingual skills, they are once again ready to bring the promised manna to their less fortunate brethren. Cut the crap, fellers, just get the bloody job done.

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Responses

  1. I agree that India has “opportunity of a lifetime to ‘decouple’ itself from the sleeping giants of the western world and drive ahead on the road to prosperity”. But the fact of the matter is that India has had this opportunity for decades, most of the time with the current ruling dispensation in place. And, over the years, any effort made to transform opportunity into reality has been half-hearted as best.

    Many believe that sans the Leftists and other obstacles to progress, the Congress-led UPA regime will now power ahead with initaitives that can only bring more happiness and prosperity. Even with a huge mandate (400 seats in the Lok Sabha!) post 1984, not much really got done by Rajiv Gandhi. Increased strength does not always translate into better performance.

    Those who are expecting Manmohan Singh to have a free hand so that he can start delivering economic goodies need to just look at the facts (and not get swayed by rhetoric) – his preferred choice of finance minister, Montek Singh Ahluwalia, was rejected.

    Sure, feel free to hope that they get the job done, but don’t count on it!

    (An interesting view on UPA-part II is here: http://www.dnaindia.com/report.asp?newsid=1259558)


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