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Vikas missing

Yet again, the government is admonished for neglecting the reforms agenda.

By: Express News Service |
February 19, 2015 11:19:14 pm

First, it was Columbia University professor Jagdish Bhagwati. Now, it’s the turn of another right-thinking Gujarati —  HDFC chairman Deepak Parekh —  to voice displeasure over the functioning of the Narendra Modi government. While Bhagwati admonished Modi for not taking a strong position against Hindu chauvinist elements — including ministers and parliamentarians of the ruling party — Parekh’s warnings pertain to the business community’s growing “impatience” at seeing no real change “on the ground” in the last nine months.

Their views only echo what many have been saying in private: this government has so far proved to be long on rhetoric and short on delivery, while allowing issues such as religious conversion to detract from its larger development agenda. Parekh has gone as far as noting how “lucky” the prime minister had been with global oil and commodity prices; had these not fallen, the situation today may have been worse.

But the good luck has not been limited to just oil. It has also extended to the markets: since May 26, the BSE Sensex has risen by nearly a fifth. Yet, this luck hasn’t been sufficiently leveraged to embark on an aggressive disinvestment programme. When market conditions were so good, why did the government wait till December to launch its stakes-sale exercise for 2014-15? Did the sudden realisation that poor revenue collections would not help meet deficit targets urge it to go for a mega offer of Coal India shares late last month? The same indecision applies to urea imports. By not contracting for imports in time for the rabi plantings, a fertiliser shortage was created, resulting in black-marketing and further queering the political pitch for decontrol of urea. This, even as subsidy due to the fertiliser industry is slated to cross Rs 40,000 crore by March-end. And in public-sector banking, when the problem of non-performing assets is so widely appreciated, why are many of them still headless?

Parekh’s outburst is well-timed — before this government’s first full budget. The Indian economy now faces a crisis of both demand and investor confidence in greenfield projects. The Union budget is a make-or-break opportunity to address both concerns. It would be judged primarily by the effort made at boosting public capital investment through slashing non-productive expenditures and better targeting of subsidies, apart from raising resources from a more ambitious divestment programme. The Modi government should see this as a good opportunity to silence both its critics and those wishing it well.

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First published on: 19-02-2015 at 11:19:14 pm
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