Indian Prime Minister Manmohan Singh has sent “clear signals” to investors that he has stepped in to take charge of the economy – for as long as it takes – not only to restore growth but also to get his party back in the reckoning for the general elections in 2014, say those with some inside knowledge of things.
With the Congress-led United Progressive Alliance (UPA) government perhaps facing one of its toughest times, what with corruption charges against cabinet ministers and the growing perception of “policy paralysis” in the government, the prime minister was keen to correct the course, say aides and officials.
After he took over the finance ministry with Pranab Mukherjee quitting the post in order to fight the presidential elections, there have been signs of upturn in market sentiments with the reins now in the hands of the prime minister, who is acknowledged the world over as an economics guru who freed the Indian economy from its regulatory shackles in 1991 when he was finance minister in the government of prime minister P V Narasimha Rao.
With political compulsions making it difficult to take tough economic measures, officials in the know of the situation said the government has decided more or less to ride with the Samajwadi Party in this “tumultuous journey of growth” that was key to the economy’s revival.
The reason could be the unpredictablility of mercurial Trinamool Congress chief Mamata Banerjee and her opposition to moves to boost investor confidence, especially in opening up retail to foreign supermarkets and department store giants.
“He (the prime minister) is keen to shed this image of policy paralysis in the government. He wants to send this message that India is ready to face the challenges and take corrective measures,” one official told IANS.
“He also wants to send a message that he is in charge of the economy and by all indications he is here to stay as long as it takes,” the official added, not wishing to be identified.
Another official said that for some time the focus of the government will be on “fixing” the economy.
“Mrs. (Sonia) Gandhi and the prime minister have taken a decision that the focus should be economy. Elections are next year and bad economic growth could turn the tide (against the party),” another official said in a background briefing.
He said the focus will be on “inclusive growth”.
“The prime minister is very sure about the fact that it has to be inclusive growth, which takes everyone along. A better economy will also mean more investments and more jobs for the people,” the official said.
He said that political consideration had taken a toll on many a government decision on the economic front.
“It more or less looks like that the Samajwadi Party is in. They have also indicated that they will support the government on major (economic) decisions,” the official told IANS.
In his interview to the Hindustan Times – a media interview that he gave after a long time – the prime minister also hinted at it.
“More important is that we need political consensus in the government on some policies. There are genuine differences in opinion. So, in a democracy, consensus building is the key to long-term economic success and we are steadily moving ahead in doing that,” Manmohan Singh said in his interview.
On the perception of policy paralysis, he evaded a direct reply and said there were problems that existed among political parties in the previous government run by the United Progressive Alliance (UPA), but that the focus remained inclusive growth.
“We are passing through a similarly challenging situation and I am confident we will roll out measures to restore economic growth once again,” he said, adding he also did not believe that legislation was a bottleneck to economic growth.
“Barring an issue here and there, most economic steps that need to be taken do not need legislative action,” he said.
“The India Growth Story is intact. We will continue to work, as we have been doing for eight years, to keep the story going,” he added.
His statement immediately got a thumbs up from industry chambers FICCI and ASSOCHAM.
“Things will be clear in a few weeks’ time. Just wait,” another official added.