March to the past not the way forward
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Welfare schemes might yield some benefits but massive ones like the one planned for food security would undermine govt's capacity to spur growth
The policymakers in India talk almost in one voice about the urgent need to further and augment the economic liberalisation process, though their focus seems to be on giving more leeway for financial-sector players than structurally improving the real economy.
But curiously, it's a tougher time than normal for them to walk their talk. The policy apparatus is slothful, even as the two largest political parties — the Indian National Congress (INC) and the Bharatiya Janata Party (BJP) — broadly agree on the direction of the reform process. Both parties stress the imperative of rapid and sustainable economic growth.
They feel India's way out of poverty — which millions of its population continue to endure — is, more than anything else, an accelerated rate of expansion of the gross domestic product, possible only with more liberalisation measures. Careful reform of the financial sector, the two parties appreciate, is necessary for catalysing savings and investment. The aspect of distribution (witness the coinage "inclusive growth"), is not to be slighted, though.
One has to meander into the details to gauge how the two parties differ on the specific items of policy action being proposed by the incumbent government.
Yet, it would seem, the policy atmosphere is no less troubled by contradicting objectives and political intransigence during these times, than in any period since the 1980s, when the hitherto-hidebound Indian establishment's attitudinal change on economic policy-making began to become visible.
As far as policy-making is concerned, there is seemingly a throwback to the 1970s when India crawled with a GDP growth of around 2%.
During the 70s, China was already decisively shifting into a high-growth mode, but Indian policymakers remained confused, unable to disavow the now-despised Nehruvian socialist path that yielded stagnant growth. Paradoxically, the present-day political and public policy discourse is also marked by a similar ambivalence.