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| Faster growth possible | | Politics, however, may create hurdles | |
IN his state-of-the-economy re
port C. Rangarajan, Chairman
of the Prime Minister’s Economic Advisory Council, has hinged his prediction of India achieving a 6.4 per cent GDP growth in the current fiscal year on the government taking right policy and administrative decisions. Slow decision-making has brought down the growth rate. Delayed environmental clearances and land disputes have held up projects involving an investment of Rs 7 lakh crore. There are positive indicators that the growth target is achievable. The government has set up the Cabinet Committee on Investment, which has started its work. On Monday it cleared 25 oil and gas blocks and 13 power projects. There is a broad political consensus on the land Bill and, hopefully, Parliament would clear it in this session itself. The fall in gold and oil prices has come as a blessing. This will help the Union government narrow its scary fiscal and current account deficits. Inflation too has started moderating. Reports of a normal monsoon this year have spread cheer. There is the hope that the RBI would announce a sharp cut in interest rates at its meeting on May 3. The latest rally in stocks is in expectation of this. While Finance Minister P. Chidambaram is travelling abroad trying to sell the India story to foreign investors, Rangarajan claims that there will be 25 per cent lower foreign capital inflows this year than last year. This may be partly because of political uncertainty in India with the Lok Sabha elections looming and partly because other emerging markets and Japan are becoming more attractive destinations for foreign investment. Politics remains a key impediment to India accelerating its growth momentum. Given the political logjam and BJP belligerence, key Bills may not get through. The UPA government is short of clear majority and can be brought down by any of its undependable allies. Moreover, the Congress has to win elections and its populist stance may bleed the exchequer and silence reform enthusiasts, whose number anyway is limited. |
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