If history is any indication, G20, a group of 20 major economies that account for more than 80% of the global world product (GWP), has consistently failed to live up to its promises. And we as a country seem to be confirming this trend. In a recent address during the Plenary Session of the seventh Summit to G20, the Prime Minister has suggested a reform agenda tackling the issues of subsidies and fiscal deficit.
However, judging by the policy actions or rather the lack of them in the recent past, the scenario back home is starkly different. Forget the over ambitious target of getting back the growth rate of 8-9%. With domestic growth slipping to 9 year lows in the last quarter and the Eurozone crisis gaining new dimensions, we will be lucky to reach even 7% growth this year.
The problem is not ignorance of the issues. What is pulling us down is knowing the right thing to do and choosing not to do it. Take diesel prices for example. The deregulation of diesel prices is long overdue. However, the Government is still choosing to buy time on the pretext of Unique Identification Numbers; the pan India implementation of which will take a long time. Meanwhile no one has a clue as to how the Government will deal with the rising subsidy bill. The weakness in crude oil prices will hardly be of help if rupee keeps falling at the current pace.
The Prime Minister sounds optimistic on reviving the investor's interest in the economy and containing fiscal deficit. How he intends to do that now without letting inflation rear its ugly head is an issue he has chosen to ignore in his recent address to G20. While an overall weakness in the global markets has led to a slowdown in the capital inflows, the Government has only helped the trend by sitting silent on various reforms and policy measures. The claims of the Government that it is focusing on infrastructure investment sound shallow when distorted policies are so obviously crowding out private investments. All we have to say is that we have had enough of speeches. It is time to walk the talk. We need to take control of domestic issues first if we seriously wish to be taken seriously on the global stage.