It’s that time of the year when we look up to the skies in hope. Hope for a bountiful monsoon that will grab us from the downward slide and give the economy the boost that it craves.
The first burst of monsoon rains is crucial for the kharif crop that accounts for about half of the food grain output. Agriculture Minister Sharad Pawar said last week, “Up to July 2, the country as a whole has deficiency of 31 per cent. But rainfall is expected to be better from next week onwards.” The week has gone by and most of India is still looking upwards at cloudless skies. Now we can expect ‘distorted rains’. Farmers magically knew this and hence sowing of maize jowar and bajra has been affected. 15 per cent of our economy is dependent on the farm sector, which is still largely monsoon dependent. We can’t run away from the fact that a bad monsoon casts a depressing spell and hinders economic growth in the country.
Look around and you will see that the go-slow is affecting urban India. Construction activity is grinding to a halt, shops are seeing fewer footfalls, and though there are crowds in the malls, few are buying. Auto sales are down, gold and diamond jewellery sales are down, companies are not hiring, white goods are not being sold and this in a country, which is supposed to be the hope of the retail industry of the world! By some estimates India is set to be one of the top five economies in terms of GDP by 2030 with a retail market pegged at US$ 675 billion by 2016.
Such is the desperation for good news in the stock market that mere reports that the government may soon notify 100 per cent foreign direct investment in multi-brand retail saw retail stocks surging 14 per cent in just one day.
A lot of it is about perception. On just one hint of correction of a tax regime, the stock market reversed its fall. Imagine what could happen if structured reforms could be put into place in the next two years? India’s economic troubles are mostly self-inflicted, resulting from policy paralysis and opposition to reforms — a situation that is unlikely to change before the general elections in 2014, says a report titled: What’s Gone Wrong in India? — By Capital Economics, a global macro-economic research consultancy
On the other hand a UN report based on a survey conducted between February and May this year of some 179 global manufacturing and services companies found that India was 3rd on their most favoured investment destinations list for 2012 to 2014.
It is all about perception. Whether he brings in Reforms-3 as his supporters claim he will, in his avatar as the new Finance Minister cum Prime Minister, is something the Congress party will have to decide very soon. That is the only hope the Congress Party or the UPA has to return to power in 2014.
That and the fact that the BJP is hell bent on scoring self-goals and painting itself into a darker corner than the Congress. One can’t help but wonder what kind of a masochistic streak is the BJP inflicted with. Here is a political opportunity on a platter for the taking. An economy that seems to be on a slide, and may not stabilize and all it needs is for the BJP team to present to the people a plan of governance that will increase growth despite external influence.
But no, instead what we have is the following: a fight on whether Pranab Mukherjee’s signature is true or fake. Yeddyurappa versus Gowda versus Shettar versus a gaggle of go-betweens. Prime Ministerial candidates posturing years before elections. Poster wars between Joshi and Modi. Nitish in or out. Petty fights that keep even Jayalalitha, Mamata and Mayawati away from the BJP. Slowly the NDA crumbles which may or may not be a good thing for the BJP.
Meanwhile the Time magazine put the Prime Minister on the cover with a poser: “India needs a reboot. Is Prime Minister Manmohan Singh up to the job?” Dr Singh seems to have pre-empted the cover story and taken up the task. He has one year. The election year a sop year, everybody knows.
Smita Prakash is Editor, News at Asian News International. You can follow her on twitter @smitaprakash