'A stable government will help in a smoother rollout of reforms'
Lately many Indians have been losing sleep over an unfl attering economic growth rate, gloomy investment climate, a weak rupee, and uncomfortable levels of unemployment, fi scal defi cit and food infl ation. Against this backdrop, a stable government might not be a panacea to our economic woes. But it will certainly correct the many factors that have been hitherto causing the economy to lose steam.
First, owing to an uncertain future, most companies and investors are warily holding their horses. Once the authority at the Centre is ascertained, this 'wait and watch' phase will end, leading to higher investment fl ows, a stronger rupee, greater economic activity and in turn better job creation. Second, a stable government will provide a more conducive environment for a relatively smoother rollout of reforms. Third, the government in power was playing it safe and not pushing for diffi cult reforms aggressively. A stable government would get more room for addressing serious and fundamental economic challenges on the power crisis, infrastructure defi cit and need for skill formation. Last, there will be better scope for exercising fi scal prudence as against the incumbent government's pre-poll tendency for fi scal profligacy.
India, however, is notorious for acting only in the face of urgency. Whichever government comes to power next can only ill afford to not learn from past governments, resist complacency and consistently deliver on the front of reforms and economic development.
SOMYA BARPANDA PGP (2013-15)
Vishnu Kaant Pitty
'Good governance not stability is the critical factor'
This demand, and the implications that a truly stable government will have for the country, need closer scrutiny. Let's consider the nature of the economic woes that is plaguing the country. Inadequate infrastructure development, low human development indicators, public distribution leakages, faulty policy implementation - these are the glaring economic challenges ahead for any government that comes in power. The root of all these economic woes: corruption.
At a policy level, to get rid of populist policies, or leakages at various points in policy implementation, it becomes important for the government to be rid of corruption within itself. This is where the argument in favour of stability is weak, for it is the sense of power fostered by a stable government that invariably engenders corruption.
Granted that a stable government will make for a faster policymaking process in the country. However, the solution to India's economic ills doesn't lie in the effi ciency of policymaking, but rather in the nature of policies being expedited - in how good the governance of the nation is. The world is rife with cases of complacent or corrupt (but stable) governments taking economic policies for granted.
Take, for example, Robert Mugabe, the longest serving president of Zimbabwe - who was sworn in for his seventh term last year. Under Mugabe's administration, Zimbabwe has suffered from much economic turmoil, including sanctions, extreme poverty, and most glaringly, the infamous hyperinfl ation of 2008/09.
VISHNU KAANT PITTY PGP (2013-15)