Well, after a fairly long time of around two years or so, there seems to be light at the end of the tunnel for the Indian Economy.
Any such economic progress would not have been possible without a new leadership, and so was the case here as well. The new (and not so new, if you know what I mean !) Finance Minister of India Mr P Chidambaram (PC as he is referred to in the media) brought significant hope when he assumed his new post several months ago. The previous Finance Minister thankfully left the job and became the President of India, which is largely a ceremonial post at the apex of the Indian state which has a Prime Minister driven British-style Cabinet and Parliament system ruling the country.
PC has been successful in the past as a proven Finance Minister before he went on to become the Home Minister in the aftermath of the Mumbai 26/11 terror attacks, again replacing a rather ineffective minister. He did a fairly good job as the Home Minister though opinions vary and no section of the society is entirely happy with the fact that justice had not been served for the 163 lives lost in that gruesome terror attacks wreaked by Pakistan-based jihadi terrorists.
Now PC is back in the Finance Minister mantle with an unenviable task of fixing the weakening economy – India’s GDP growth rate for the current fiscal year ending on 31st March 2013 is not expected to be more than 5.75%, a big fall from the previous year even, and a huge fall from the 8%+ growth rates prior to 2009. Inflation and huge subsidies have caused big harm to the citizens and the economy, and the Reserve Bank of India has not been seeing eye to eye with the Government on the need to cut interest rates.
PC and RBI Governor seem to be having divergent views on the need to balance the economy between the twin challenging goals of economic growth and controlling inflation. Though PC has publicly stated that there is commonality in the view points, no one is fooled.
It would be interesting to see what the RBI does to the interest rates in the economic review coming up shortly.
Notwithstanding all this, there is lot of hope amongst business and industry that PC will do whatever it takes to rein in the fiscal deficit and restart India’s economic growth in a trajectory headed towards the 8% magic figure. It is definitely possible, but PC needs all the cooperation that he can get from the rest of the Government and the RBI.
There is surely new hope for India after a fairly long time ! Let us hope for the best !! For the citizens and the industry.
27th January 2013