Indian economy slowing down: the future of young people at risk
Mumbai (AsiaNews) - The economic growth of India that was up to 9% in the later part of the last decade is currently slowing down at 6.1% in the quarter ended Dec.31, the slowest in the last three years. The Government has already downgraded expectation of growth this March budget.
This slowing growth challenges two views cherished by leaders in New Delhi: that the country will effectively eradicate poverty within the space of a generation, and that it will assume its rightful place in the front rank of global powers. Both goals depend on an economy that generates enough resources to fix glaring deficiencies in health and education and to build a muscular military. India must also generate jobs to ensure that a youthful population is employed productively rather than drawn to myriad violent movements - from Maoism to ethnic separatism to religious radicalism - that dot large part of the country.
Though the global economic slowdown hasn't helped matters, The Wall Street Journal blames India's politicians. Instead of using the bounty of the boom years to double down on reforms, the ruling left-of-center coalition led by the Congress Party appears to suffer from a strange hankering for the socialist past. This has led it to sacrifice a historic opportunity to swiftly transform India into a middle-income country on the altar of shortsighted populism.
Nobody embodies this sorry state of affairs more than the Prime Minister Manmohan Singh. Ha was once touted as a great reformer, thanks to having been the finance minister who unleashed the "Big Bang" reforms amid a balance of payments crisis in 1991. But his tenure as Prime Minister has been different. Most recently, the first sign of political opposition was enough for him to abandon a plan to lift restrictions on foreign investments in retail. These days he's more likely to be seen muttering darkly about foreign hand behind anti-nuclear protests in the southern state of Tamil Nadu than make a principled case for deeper liberalization.
The government's biggest "achievement" is its flagship National Rural Employment Guarantee Act, which promises each rural person a 100 days of work per year. This distorts labor market, encourages widespread corruption and has helped - along with fuel and fertilizers subsidies to balloon the federal fiscal deficit to an estimated 5.6% of GDP this year instead of the budgeted 4.6%. A proposed food security bill would poor billions of dollars more into a public distribution system already notorious for graft and wastage, and create a new entitlement that future generations will find difficult to kill.
Slowing growth should be taken as a warning that there won't be sufficient spoils to divide if Delhi continues on its current course instead of shifting to a strongly pro-growth policy. The question now is, how quickly will Indian politicians heed the alarm bell being sounded by slowing growth and undertake reforms to unleash the country potentials.