The year 2011 has been the worst year for India as far as policy initiatives, policy implementations and legislations are concerned. Not a single piece of reform has been taken up by the Govt. From the beginning till the end other than the discussion on the Lokpal, Govt did not do anything substantial on reforms. It has been just sleeping.
If recession plagues the West, inflation plagues India. Inflation is a sign of economic growth, but excessive inflation is a sign of huge mismanagement of the economy.
The Indian economy has clearly slowed down. The growth levels have been reduced from 9% to less than 7%. High inflation, high interest rates (auto, personal, credit, home and virtually everything), low growth and lower industrial growth has now taken the sheen of the India growth story.
The rupee has gone to new record levels of close to Rs.53 against the dollar. This is a new record. This appreciation means imports will get costlier. The oil prices will rise and adding to the RBI's interest rate hike the inflation will go northwards without a stop. The government doesn't want to take any step. The Govt has not even passed many of the bills which can usher in new economic spurt such as Companies Bill, Direct Tax Reforms, Land Acquisition Act, FDI in aviation, The Seeds Act and many more.
For one year other than just talking nothing has the PM nor the Congress party done anything new in the economy. The thought probably is India is rising and there is no need to act. This is a colossal mistake.
Let's take some numbers. Industrial growth has slowed to <2% this year. No major projects, proposed projects have been getting delayed due to the same reasons like Land issues and delayed environmental clearances. Clearly, the Govt has not defined new rules under which Land can be acquired for any project and if acquired what sort of compensation will it give to farmers. How long will the govt take to bring in that bill? Rahul Gandhi has been shouting for this bill to make political gains over Mayawati, but has not been bothered to push through that bill to make it to the Parliament to discuss it.
Car sales have slowed down, investment in real estate has slowed down. The amount of dollars that flooded the Indian market in 2009 has clearly reduced to drastic levels. The result is the rupee falling to Rs.53. The compounding crisis of the Europe has also hurt our exports(both goods and services). Neither the Govt nor the RBI have any tools to control this. The only way the govt can bring in the dollars is to increase the confidence in the Indian economy by passing some key legislations like the ones mentioned earlier.
Of 183 countries in the world, India ranks 165th for starting a new business - mainly because of complex rules and red tapism. The new Companies bill drafted by the Govt has to be pushed through the Parliament.
India's electricity and energy sector continues to pose significant problems for the growing industry. No major initiative has been done to drastically improve this sector either.
Looks like the Congress Govt has become lazy, incompetent and over confident. Their over confidence may be that no matter what happens they will continue to be in power. I am alarmingly shocked that when many European nations have had regime changes and new technocrats rather than politicians have taken center stage, our very own technocrat PM Singh lacks political will to bring in changes. His relevance as a technocrat stands completely hollow now. I don't know how many in India think that life has gotten any better ever since the second time PM has been voted back in 2009. It was a golden opportunity that India missed now that the US and Europe's economies have declined.
The time has come to take action. The govt said it has cleared FDI in retail to flood the market with dollars again to counter the depletion and the deterioration of the Indian rupee and economy. There are almost 40 key legislations and none seems to be passing this Parliament session. The opposition party BJP must shout slogans or raise the level of the debate in Parliament but should not stall the passage of many of these bills.
Indian growth story can continue only when the government can take tough policy decisions. Now that the economies of the West are in the dark, it presents a golden opportunity for India to shine. This only can happen if the government wakes up from the sleep.