The Telegraph
Since 1st March, 1999
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Pundits agree that India’s economic future looks good unless politicians, as is their wont, muck it all up

In the beginning is the economy. The performance of the economy determines how people feel about themselves and about their environment and their experiences. A buoyant economy nurtures a sense of well-being and optimism. This is evident from what is happening in India today or at least that part of India that is articulate and in a position to influence perceptions and the general outlook on society. There is an obvious confidence and an air of goodwill abounding among businessmen and the middle classes. They — to use a phrase very popular in Harold Macmillan’s England — have never had it so good. The macroeconomic figures speak for themselves. For the first time since the late Eighties, India seems poised for an eight per cent growth. The foreign exchange reserves have hit an unprecedented high and have indeed become an embarrassment of riches. The bourses continue to do well despite bomb blasts in Mumbai and legal obstacles to the process of disinvestment. Corporate results of the second quarter bring good tidings. Trends suggest that corporate India will post a double-digit sequential growth in sales and profits for the first time. There is good reason to feel optimistic about the Indian economy. Pundits seem to be in agreement that India’s economic future looks good unless politicians, as is their wont, muck it all up.

The scepticism about the politicians is not without basis especially as India has entered the run-up to another general election. This is the time when an incumbent government inevitably stoops to populism, the bane of economic reforms and economic growth. Despite a decade of economic reforms, much of India’s economic activity is heavily dependent on government policy and government initiative. The rolling back of the state, an essential condition for the completion of economic reforms, is only an item on the reforms agenda. Many years ago, it used to be said that the Indian economy is a gamble on the monsoon. Those days are passé, but the progress of economic reforms is a gamble on the government’s political will. The word progress is used advisedly. The reforms are irreversible but their pace can still be dictated by the political process.

But these considerations cannot vapourize the feel-good factor being enjoyed by the middle classes and India Inc. The former relishes the world of choice that has opened up. This is manifest in the spending spree to which the consumer seems to be committed. Competition has created choice; it has also inevitably led to cheaper and quality products. The latter revels in higher turnover and larger profits. The prospects of investment look brighter than ever before and the investor can now declare his faith in the Indian economy.

India could ask for no better gift during the festival of lights. There are shadows and areas of darkness, but these tend to be minimized in the general illumination. Bharat may be in partial darkness but India is lit up. The light comes not from the Diwali sparklers that burn themselves out but from the beam of a lighthouse beckoning the ships of economic growth and modernity.

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