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India India in the Slow Lane

Discussion in 'Breaking News' started by Archived_Member16, Feb 10, 2013.

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    EDITORIAL: The New York Times

    February 9, 2013

    India in the Slow Lane


    India’s economy is about to clock its slowest annual growth rate in a decade. The government said recently that gross domestic product would likely grow at just 5 percent in the fiscal year that ends in March, a sharp fall from the 9-plus-percent growth rates of the mid-2000s.

    This slowdown should alarm the government of Prime Minister Manmohan Singh, who has been far too timid in addressing the country’s economic challenges. It will be particularly devastating for the hundreds of millions of Indians who are struggling to lift themselves out of poverty; this growth rate means that the country’s per-capita income is growing at just 2.9 percent a year.

    This weakness should also worry the rest of the world, which increasingly needs India to play a bigger role in the global economy. While India has been hurt by the economic troubles of Europe and the United States, its current problems are largely attributable to the passivity of Mr. Singh and Sonia Gandhi, the leader of the Indian National Congress Party, who put him in the job.

    Under their leadership, the economy remains hobbled by widespread corruption, counterproductive regulations, weak infrastructure, and government ownership of most banks and many major corporations. As finance minister 20 years ago, Mr. Singh played an important role in freeing some areas of the economy from a stifling “license raj,” in which businesses were required to get government approval to set up shop and even to change production levels. But as prime minister he has done little to follow up on those important early reforms.

    The finance minister, Palaniappan Chidambaram, appears to realize the urgent need to shore up the economy. In recent months, at his prodding, the government has begun making changes — for example, distributing subsidies like scholarships and pensions directly to citizens instead of channeling them through corrupt bureaucracies.

    Still, one finance minister cannot turn India around. It will require Mr. Singh and Ms. Gandhi to push for legislative and administrative changes to build roads and rail lines, add capacity to backlogged courts, improve primary education and bring transparency to the corrupt way in which political parties are financed.

    The money to pay for needed improvements could come from privatizing inefficient state-owned companies and banks. It will be difficult to sell these reforms to Indian political leaders, many of whom are ideologically opposed to the free market or benefit from the dysfunction, but that should not stop the duo from pushing them.

    India will hold elections next year, and many analysts are already speculating that the Indian National Congress Party could suffer a big defeat because of corruption scandals and its poor record of governance. The party further tarnished its image recently by reacting callously to the brutal rape of a 23-year-old New Delhi student and ordering the police to attack protesters demanding justice. Ms. Gandhi now needs to devote her full attention to reviving India’s economy.

    source: http://www.nytimes.com/2013/02/10/opinion/sunday/india-in-the-slow-lane.html?ref=opinion
     
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