He must ensure his party rallies behind the economic agenda he needs to pursue It is not difficult to figure out what Manmohan Singh will hear on his first day at office from the finance ministry mandarins. What everyone is waiting to track,however,is his response over the next few days,weeks and months in terms of setting the economy back on track. No one expects the prime minister to offer a dramatic solution to the myriad problems at hand. The drop in the GDP growth rate has happened in one year,but it will take a longer time to rebuild. Moreover,several problems that beset the Indian economy have their origins in the global economic turmoil. And its reverberations will continue to be felt. From the 1990s,when Singh was last at the helm of economic affairs,the degree of integration of Indias economy with the global economy has increased by several notches. The trouble with the domestic hot spots is that many of them have grown on Singhs watch as prime minister. As a consensus-seeking leader,he tried to deal with them by setting up GoMs,24 of which were chaired by former finance minister Pranab Mukherjee. But obviously that line of action has not delivered in several instances telecom and natural gas pricing are the two glaring instances. So Singh must now either acknowledge them as failures and start afresh,or try to incrementally move the issues to his line of vision. This is where the PM will have to show his signature. Even the first course of action will exact its toll on the economy,but the latter promises to clip off valuable years from what was considered to be Indias growth decade. The signs for this quarter are already worrying. A Crisil report on 247 of Indias listed companies shows that revenue growth will be the weakest in the past six quarters as demand has moderated,dropping by about 3.5 per cent points to around 14 per cent. As a result,a Morgan Stanley report on SBI says its portfolio of non-performing assets would worsen in this quarter. A key reason why India is underperforming is the compass set by the UPA government. Government resources have been stretched way beyond what it could tolerate,crowding out private investment and letting loose the ogre of inflation. Fiscal profligacy,including ills like the petro subsidy,becomes difficult to contain unless the direction from the top is clear. Singh has to put his party behind the economic course he needs to pursue. That is the biggest challenge he will need to address in the dual role he has assumed.
