Tags:
Journalism of Courage
The news that the Indian economy grew by a mere
5.3 per cent in the third quarter of 2008-09 serves as the first official acceptance of the economic slowdown in India. For many months we have been hearing the government and policy-makers talk about continuing high growth in India,based on the strong domestic economy or buoyant investment climate. The misconception that India would not be affected by the crisis was part of the reason for lack of adequate policy action. Notice how monetary policy has gone into a freeze despite the disturbing news month after month on stagnation in exports,industrial output and prices. This has to do to a large extent with the illusion that somehow magically things will be fine with India. As this newspaper has repeatedly argued since mid-September,India cannot be insulated from the worlds major economies and that the sooner we accept this and take action to prevent further damage,the better off we shall be. The dangers posed by not taking action are far greater than the risks posed by any action that is taken to provide a counter-cyclical impetus to the economy.
Looking ahead,the official forecast for the full year is 7.1 per cent. Since growth in the first 9 months was 6.9 per cent,this suggests that the present quarter is expected to see phenomenal growth to achieve this number. The government should now be more realistic and reduce its growth projections rather than lose credibility.
