One more warning

But then over the last 12 months,the UPA is caught in a quagmire of its own making with no serious effort visible either to control expenditure or shore up revenues. On top of it,the Congress-led government could not muster support even from its own allies or partymen for tough political decisions such as deregulating petroleum prices or cutting fertiliser subsidies. Having managed to pull India out of the 2008 global crisis,the government frittered away all opportunities to push reforms during the last two years. The fiscal deficit ballooned to 5.9 per cent of the GDP in 2011-12 against the original budget estimate of 4.6 per cent. So much so that nobody is willing to take the governments budget estimate for the current financial at face value. The rating agencys warning of a possible downgrade of Indias long-term rating from investment grade to junk status has uncharacteristically caught the oppositions attention. The BJP said the government was to be blamed for causing a serious dent to Indias image. And,for once,the government has shown some humility by taking note of the warning. Mukherjee,in as many words,said it was timely and promised to focus on economic reforms.

Hopefully,action will speak louder than words in the coming months. The political leadership must push through decisions such as increasing prices of fuel products in sync with rising global crude oil prices. That will be a credible beginning. Because even Parliaments standing committee on finance does not believe the government will meet its fiscal deficit target for the year. Not only Samp;P,another rating agency,Moodys,too has blamed a weak government for inaction. It took over a year for the perception of policy paralysis to set in but the reversal can begin with a few bold steps. The government must realise that downgrade is not an option. It has to act in this session of Parliament.