Ringing truth

It is not always that business leaders come out in open criticism of the government, because they have high stakes in the official goodwill, executive discretion and policy environment which are important factors in the growth and success of their enterprises.

Therefore the stinging comment of Ratan Tata, chairman emeritus of the Tata group, that India has lost the confidence of the world should be taken as a bold attempt to tell the truth, forced on him by the slide of the country and the drift of the political leadership. He identified the root cause of the present economic trauma as the inability of the leadership to guide the country from the front, the sway of competing interests and the failure to implement even agreed polices. The view is certain to be shared by others also in business and other areas. It has found support in another unlikely quarter, the outgoing governor of the Reserve Bank, D Subbarao, who too has held the inaction of the government in crucial policy areas responsible for the present crisis.

The economy is in a vicious grip of falling growth, declining rupee, rising inflation and deficits, bleeding stock markets and a host of other red signals. Profits and investments are falling, debt is rising and hopes of an early recovery are receding. The faith of the world in the India story has faded in the last few years. There is no confidence left within the country too. Not long ago it was thought that India would be an economic giant two decades hence, but now it is near the basket situation of 1991 when its gold was pledged with the IMF. The option of an IMF bailout is again being talked about.

It is when the situation has gone too far to remedy that there is admission of a crisis. A flurry of late actions has not helped to make any impact. At the same time adverse signals, which show that elections are more important than the economy, are also being sent out. The prime minister says more difficult reforms need political consensus, but this is lacking in his own party and government. No one is convinced when the blame is shifted to the Opposition. A conflicted leadership always fails on policies and their implementation. The ability to evoke trust and confidence is the first call of a government. When its credibility is lost, even the right policies may not work.