But where is the prescription, Dr SinghIJ
The markets are not always the best indicators of reality, but on Friday they were, as both Sensex and Nifty fell following Prime Minister Manmohan Singh's bland statement in Parliament on the economic woes the country is grappling with. Mr Singh's observations were a litany of the known, long on assurances but short on a roadmap that can rescue the situation. In any case, the Prime Minister's promises are about as credible as golfer Tiger Wood's marital fidelity. And, it's not just the stock market which gave Mr Singh's hollow expressions of optimism the thumbs down. The Bharatiya Janata Party and other opposition parties too expressed dismay at his lacklustre performance. Everyone had expected Mr Singh to use the occasion to deliver strong signals that could set the economy on the road to some sort of recovery.
He did not set Parliament on fire when he said, with all the emphasis that a leader who has presided over the ruin of a robust growth could summon, “We have the capacity to deal with them (the challenges)”. If his Government has such capacity, it has managed to carefully hide it so far. Had it been waiting for the economy to arrive on the cusp of collapse before unleashing that capacityIJ And, if better late than never is this regime's norm, people would want to know just what the Congress-led UPA Government plans to do now. Mr Singh, as always, has no answer. Instead, he dips into statistics to build a fictitious case. He claims that the country's external debt is at a manageable 21.2 per cent of the GDP; that short-term debts stand at a mere 5.2 per cent; and that foreign exchange reserves are $278 billion. The external debt would have been considered manageable had the value of the rupee not plummeted; the short-term debt would have been easily handled if the Government did not have to scramble for funds that are hard to get largely as a result of its profligacy; and the forex figures would have sounded impressive if one did not take into account the dip the foreign exchange reserve has registered in the last five years, and the drop in inflow of foreign funds.
Similarly, his fervent belief that the Government can contain the fiscal deficit to 4.8 per cent sounds flat. The Prime Minister's resolve to do “whatever is necessary” does not match the action his Government has taken of late. It has brought in a food security scheme that will burden the exchequer with a back-breaking subsidy at a time when the economy is gasping for breath. The various expensive entitlements which his regime has unleashed primarily as vote-catchers will add to the spiralling fiscal deficit. Despite such dismal decisions, Mr Singh has the audacity to observe: “The most growth-friendly way to contain the deficit is to spend carefully…”
On the continuing decline of the rupee in dollar terms, Mr Singh could only commit that his regime would address the matter “through other measures” and not by further capital controls. He left it to the Members of Parliament and the country to speculate what those “other measures” will be. That's not because the Prime Minister loves to engage others in guessing games but because he genuinely has no answer on how to effectively check the dwindling currency. Mr Singh falls back on the dubious ‘Government will make all efforts' devise to promise the containment of the current account deficit “to 2.5 per cent of the GDP”. His solution: “We must reduce our appetite for gold, economise the use of petroleum products”. If only things were that simple.
