UPA-2 is up the creek without a political paddle: PM's ex-advisor

Did Standard and Poor’s downgrade India or the UPA-2 government?

Sanjaya Baru, who was the Prime Minister Manmohan Singh’s press advisor in UPA-1, believes that the S&P downgrade to BBB- (with negative outlook) last week was not just about the deteriorating fiscal situation, but the political inability of UPA-2 to get its act together.

Writing in The Indian Express, Baru says today’s crisis is similar to the lack of political credibility of the minority Chandra Shekhar government in 1990-91, when the International Monetary Fund (IMF) failed to give assurances on a rescue loan without a credible government in place. The G-7 and Japan also declined requests from the Indian government for help for the same reason.

[caption id=“attachment_295979” align=“alignleft” width=“380” caption=“Sanjaya Baru, who was the Prime Minister Manmohan Singh’s press advisor in UPA-1, believes that the S&P downgrade was not just about the deteriorating fiscal situation, but the political inability of UPA-2 to get its act together.AFP”]  [/caption]

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This must-read article clearly suggests that economic failures are usually preceded by political failures.

Baru writes: “…the crisis of 1990-91 was as much about a weak economy not being able to cope with external pressures as it was about a weak government not able to cope with domestic ones. Today, the economy is stronger, but the ‘political setting’ does not appear to be so. Re-establishing the ‘credibility’ of the government is key to averting an economic crisis.”

For Baru, the correct question to pose in not whether 2012 for the Indian economy is like 1991, when the external crisis waylaid us, but whether it is like 1990 - the lull before the storm.

He concludes that the 1991 crisis was the result of “several years of economic mismanagement” compounded, finally, by political ineptitude.

Seems like a perfect description of UPA-2 today. Dr Singh, Sonia-ji, are you listening?