He’s the eternal optimist. Even as international ratings agency Standard and Poor’s (S&P) warned that India could be the first BRIC nation to lose its investment-grade rating, finance minster Pranab Mukherjee declared that the financial year ending March 2013 would be a ‘turnaround’ year for the Indian economy.
He insisted the government was taking steps to nudge India back on the path of high economic growth. “We are taking all necessary steps to ensure we come back to the path of the targeted GDP growth,” he said. “Of course, it will take time but from this year, we expect to make a turnaround.”
On what does he base his upbeat assessment? A decline in global oil prices and a normal monsoon, of course. And an increase in tax revenues as well.
Note, however, the turnaround will not come about because of any economic reforms. That clearly is still not on the agenda. (Incidentally, he didn’t elaborate on what steps the government was taking to jump-start the economy — other than perhaps, pray?)
Instead, it seems the FM continues to believe that external forces hold the power to either lift the economy up or drag it down. If the economy perks up, it’s because the rain gods have smiled favourably on us, or because the Middle East sheikhs have decided to do us all a favour by agreeing to lower oil prices; if the economy sinks further, it will be because of Greece. Or Spain.
Clearly, he doesn’t think a policy-paralysed government is to blame for the mess the economy is in — or should be held accountable for fixing that mess.
Which is why his reaction to S&P’s ominous warning was, well, rather predictable. He dismissed it completely.
“This (S&P report) is not based on a fresh rating action …Between April 2012 and now there are no significant events to indicate that the economy’s vulnerability to shocks has increased, though the growth numbers for the fourth quarter 2011-12 have come below the expectations,” he said in a statement.
He didn’t stop at that. Mukherjee also insisted that there were some positives for the Indian economy. “The interest rate cycle has been reversed, mining sector growth has turned around and progress has been made on fuel linkage for coal-based power projects,” he said.
All three claims can easily be debated. There’s a lot of talk on whether interest rates can be cut much further, regulatory hurdles still cripple the mining sector and as for coal-based power projects, well, they’re getting fuel because Coal India is being forced (by Presidential directive) to supply coal at below-market prices to power companies. Hardly what you would call the ‘normal functioning’ of an economy.
Yet, our sunny FM likes to insist, as he does time and again, that “India’s fundamentals remain strong” ( he didn’t say that this time, but seems to have taken that for granted, going by his previous statements).
No matter whether India’s GDP growth falls to a nine-year low or inflation threatens to rise to double digits. No problem if the fiscal deficit hits a dangerous high or S&P threatens to lower India’s sovereign rating. There’s always a turnaround at the next corner for Mukherjee.