The US President, Mr Barack Obama’s statement that Indian economy is in a state of paralysis and a new wave of reforms would be necessary to reverse the slowdown hasn’t gone down very well with New Delhi.
The Commerce Minister, Mr Anand Sharma asserted that policy making was the sovereign right of a nation and threw the ball back in Mr Obama’s court by asking the US to lead the fight against protectionism and trade barriers. The US President is in the midst of a difficult re-election campaign and his statement was probably aimed at assuaging the general feeling that the country is shipping too many jobs to India. The crux of the statement though is that investment in India would help create jobs in the US as well. Unemployment was stuck at 8.2 per cent with 12.7 million waiting for job openings. This is hurting Mr Obama and he needs to divert attention to stay in the race. Remember how the late Indira Gandhi pointed at the ‘foreign hand’ to explain the nation’s woes? On the flip side though, the truth is that the Indian economy isn’t doing very well. The GDP grew at a sluggish rate of 6.5 per cent in the last fiscal which was lower than the expected rate of 7.5 per cent and a far cry from the 8.4 per cent the previous year. So despite the brave front put up by the Commerce Minister, a lot of tinkering needs to be done before the growth engine is brought back on track. New Delhi has been dithering on FDI in retail, thanks to opposition from within the Congress and from UPA allies, Ms Mamata Banerjee in particular. The manner in which the government sought to introduce General Anti-Avoidance Rules (GAAR) and the fall of the rupee in recent months point to a lack of political will at the Centre. In that sense, Mr Obama’s statement is not off the mark. What he conveniently forgot to take into consideration was the political compulsion under which the UPA coalition functions; and that’s the rub.