By Sanjay Kumar
After 65 years of independence, and 21 years since India implemented the great “New Economic Policy”, we are still staggering in the development front. Though at the face, things look good but if we divulge a little deeper, things don’t look as promising as it should be.
The New Economic Policy of 1991 was a milestone in Indian Economy and is still considered to be the best thing which happened to India after Independence. The Economic Policy which was also called as LPG policy (Liberalization, Privatization and Globalization), circulated new Blood to the ailing economy of India and things started looking good. India was suddenly running a marathon of development and it seemed that we were virtually unstoppable by any force and no hurdle could really slowdown our speed of growth & development. But then after 21 years, things don’t look the way we have expected. Suddenly from running, we’re crawling now. The growth story has declined from 9% to something like 6.9% now.
The Hero of our 1991 Economic Policy and growth, Mr. Manmohan Singh who ushered India to economic growth, suddenly looks like a very tired person and certainly like someone who has lost all the will and charisma to bring about new changes and infuse new energy.
Every Indian had lots of hopes from Mr. Pranab Mukherjee’s Budget of 2012 and all eyes were set on him to announce some new policies and measures for development and to write a saga which we had written way back in 1991.
Sadly, nothing concrete was announced and the Budget of 2012 looked similar to previous years with almost nothing new to offer. Pranab Da’s budget clearly lacked any Vision, Will or clarity on Government’s part. Nothing was mentioned on GST (Goods and Service Tax) and no new development on DTC (Direct Tax Code), the two things which could have really helped India steer to the path of growth and development. The need for these two policies has been felt since long but they are taking dust because of the lack of consensus among the supporting parties of the coalition government. The government always buckles down under the pressure of these regional support parties but now, the time is high for them to see and think beyond the self interest and the vested interest of these parties.
There hasn’t been much change in some of the important numbers when compared with the year 1991. Today, the current account deficit is 4% compared to 3% in 1991. There’s a growth of 1% in current deficit which clearly shows that the policies were not implemented to perfection. The fiscal deficit is 6% which is 2% lesser than the year 1991. But with such policies and their implementation, it should have been way lesser than 6%.
The recent news of depreciation of Indian rupee is another factor which has clearly pushed us a little back. With rising inflation and rupee depreciating, things don’t look too bright for the Indian Economy. Though we are sitting comfortably at $256.1 billion of forex reserves, we must not forget that during the Global Economic crisis of 2008, $60 billion was stashed away by the foreign investors and with the problem of rising inflation, we can’t be sure of this thing not happening again.
If the present government wants to maintain the same growth rate, they need to do some drastic changes and need to come out with special policies to combat these problems. We surely are at a somewhat similar position as we were in 1991. That time India had to bring out New Economic Policy because our fiscal deficit was at all time high and we were under immense pressure from the rest of the world to bring some changes and to open our economy. This time also we are bleeding under high currency depreciation, high inflation, multiple scams, black money and what not. The Indian government only takes action when they have their backs to the wall.
So, its time the government should think on these lines and must make strong policies. We are once again at the same position as we were in 1991 and we surely need another Economic Policy to march ahead in growth and development. The New Economic Policy must give due consideration to these problems and come out with major reforms in Multibrand retails, Taxes (GST & DTC) and New Labour Policies. Without these new reforms, we still would be standing with our back at East and expecting that the sun would rise from the West.
(The author is currently doing MBA from VGSoM, IIT Kharagpur and can be contacted at email@example.com)