There is a strong sense that, in this moment of a crisis born of financial stress and of the only superpower caught in wayward wars, the world is poised at a transformation, of which we can only speculate. In the annual Nehru Memorial Lecture delivered in New Delhi this week, Fareed Zakaria, journalist and writer, pulled together some threads to gain a historical perspective of the challenge that now faces countries like India. For India, as it is for much of the world, he said, “The real crisis we face today is not a crisis of capitalism. It is a crisis of governance, perhaps even of democracy.”It would be beneficial to linger on the point a while. Zakaria reminded us that the financial crisis steamed out of control because of the American establishment’s reluctance to take tough and, in the short term, unpopular decisions, for instance by stopping their habit of using debt to sustain high consumer spending, when accruing and often “toxic” debt was itself a portent of a crisis to come. “India,” he added, “faces its own version of this challenge.” Government’s decisiveness will be key at this time. After years of strong economic growth led by the private sector, the financial crisis will shine the light on timely, well-judged policy decisions.In this regard, it will be interesting to track policy-making in the next few months. It’s no secret why governments are reluctant to take unpopular decisions. Voters’ anger matters to them, and even more so when elections are forthcoming. It’s not just the cascade of assembly elections. Long-drawn-out general elections too have become the norm. There are ways governments can handle this. They can level with the people, articulate the reason why they cannot postpone what must be done. They can invite opposition consensus, thereby reducing polarisation. Both are tough. But easy choices may not be available.
