INDIA’S POLITICAL ECONOMY

REVERSING INDIA'S DOWNWARD TRAJECTORY

Shyam Ponappa

Rediff, January 5, 2012

The welter of confusing pulls and pushes on India's political economy makes finding the way forward really difficult.

The government apparently cannot sustain economic reform initiatives, and does not have the finances for a stimulus package.

The private sector is sitting on cash, but cannot invest because it is facing slowing growth and reducing margins. Known problem areas in infrastructure cannot absorb investment despite critical shortages in output - power generation and distribution is an example.

Is there really nothing that can be done but to wait and watch while everything slowly grinds down?

The circumstances are formidable: a cantankerous Opposition using scorched-earth tactics, an anarchic citizenry usurping law-making functions after the abdication by the government and the Opposition, and an administration stupefied by the CAG phantom and other witch-hunts, with media Rottweilers searching through the carnage for the scandal-of-the-day.

This article identifies critical factors at the heart of the matter, and suggests remedial action. Slowing growth is the primary problem, and can be reversed without political manoeuvring.

Some underlying factors that drive everything else need to be recognised and dealt with. For India at this stage, growth is all-important. This is the issue to be recognised and addressed.

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