What’s the problem with India’s economy? Why has growth collapsed? To read the material on this subject, you would conclude it has to do with one or more of the following: Inability of Parliament to legislate reform, inability of Prime Minister Manmohan Singh to govern, reluctance of the higher bureaucracy to move files, corruption, a deficit in the current account (more imports than exports) which is the third highest in the world, a fiscal deficit (government spending more than it should) that will grow with the food bill, the global economy’s slowing, another war in West Asia and so on.
All of our problems, it would seem, originate in government and in the external environment. It is there that the solutions must be found, and the most important one is a change in the government in New Delhi.
To my mind this focus on the immediate GDP growth is the same as examining a company and its health by focusing on results quarter-on-quarter. Growth in the immediate period is the objective and the chief executive is judged on his delivery of this. It is the wrong way of looking at it. Read More