PM Speaks on Economic Crisis: Actions Not Words Will Do

Prime Minister Manmohan Singh today spoke in Parliament on the current economic situation of the country. What he said was not different from the statement made by finance minister P Chidasmbaram a few days ago in Parliament. Prime Minister said to increase exports so did the finance minister. Prime Minister said external factor like the US Federal Reserve Policy and tension in Syria following Washington’s threat to strike as the reason for depreciation of Indian rupee. But these words are hardly reassuring unless the government acts to boost industrial production and encourage investments.

Another reason advanced by Prime Minister for falling rupee was Current Accounts Deficit. The only way to bring down the CAD is to increase exports and reduce imports. Oil is one item that costs India heavily since 80% of our requirement comes from import. On this Prime Minister said, “the current account deficit was unsustainably large and to remedy this there needed to be a reduction in our appetite for gold and consumption of petrol products, alluding to a need to reduce imports”.

There is an atmosphere of uncertainty on the economic front. The government’s failure to check corruption has eroded the credibility of the government. Only yesterday, the Supreme Court has reprimanded the government for the ‘missing files’ of coal block allocations describing it as a criminal act of the government.

Ratan Tata has said that India’s credibility in the global market has eroded considerably in the recent times due to lopsided policies. Tata said that many important economic policies were being manipulated or delayed to benefit vested interests in the private sector. Without naming anybody or any particular industrial house, Tata hinted that some leading industrialists were behind these manipulations.

Manmohan Singh preferred to keep silence on this pointed question raised by Tata.

Asking people to stop the lure of gold is not going to cut ice in the country. Indians would continue to buy gold no matter what the economic situation is like in the country.

Prime Minister thinks that Indian rupee has overshot its real value and hopes to reverse the trend, but how? He has not said much on this count. His cabinet colleague Anand Sharma, Minister for Commerce has come out with the suggestion that government should issue fresh ‘gold bond’ to attract gold from private individuals. But the Reserve Bank of India is yet to give its nod. The outgoing Governor of the RBI D. Subbarao in his last speech in Mumbai has blamed the government’s wrong policies for the present economic crisis and the slide of Indian rupee.

But our Prime Minister says, “Forex markets have the notorious history of overshooting... unfortunately this is happening not only to the rupee but other currencies too".

The notoriety of ‘foreign market’ is not a child play Mr. Prime Minister. People will not discard Indian currency for no reason. If our economy is strong and market robust, foreign exchange market would buy rupee and not sell it as is the case now. Remove the impression that the government policies are being guided and dictated by a handful of big houses. Infuse confidence in the investors foreign and domestic to revive economy. It may take time. But the government is in a hurry to push populist legislations to attract votes for the elections. When our Prime Minister talks of reducing fiscal deficit by controlling subsidies, he sounds far from convincing as subsidies will further rise by the food security bill and there is no question of government reducing subsidies on fertilizers and kerosene. Think again Mr. Prime Minister as the time is running out.

~R. K. Sinha