Silva Posted June 12, 2012 Share Posted June 12, 2012 http://www.economist.com/node/21556576?scode=3d26b0b17065c2cf29c06c010184c684 Some of this crunch reflects the rest of the worldÃÔ woes. The Congress-led coalition government, with Brezhnev-grade complacency, insists things will bounce back. But IndiaÃÔ slowdown is due mainly to problems at home and has been looming for a while. The state is borrowing too much, crowding out private firms and keeping inflation high. It has not passed a big reform for years. Graft, confusion and red tape have infuriated domestic businesses and harmed investment. A high-handed view of foreign investors has made a big current-account deficit harder to finance, and the rupee has plunged. Why, then, does Mr Singh not act? Vacillation plays a role. But so do two deeper political problems. First, the state machine has still not been modernised. It is neither capable of overcoming red tape and vested interests nor keen to relax its grip over the bits of the economy it still controls. The things that do work in IndiaÃÂ corruption-busting supreme court, the leading IT firms, a scheme to give electronic identities to allÃÂre often independent of, or bypass, the decrepit state. Some reformers pray for a financial crisis that will shake the politicians from their stupor, as happened in 1991, allowing Mr Singh to sneak through his changes. Though IndiaÃÔ banks face bad debts, its cloistered financial system, high foreign-exchange reserves and capable central bank mean it is not about to keel over. A short, sharp shock would indeed be useful, but a full-blown crisis should not be wished for, because of the harm that it would do to the poor. Sad. People need to understand that government red tape and bureaucracy is the root cause of Indian poverty and until they vote that out of the system India will remain a poor corrupt country. Link to comment Share on other sites More sharing options...
Yoda-esque Posted June 12, 2012 Share Posted June 12, 2012 Premature! Link to comment Share on other sites More sharing options...
Silva Posted June 12, 2012 Author Share Posted June 12, 2012 Premature! I don't think so. India can't keep riding the reforms passed in the early 90s and expect to become a developed country without passing new reforms aimed at increasing wealth and foreign investment. No country in the world has become developed through increasing inflation, and increased red tape along with a stubborn set of protectionist policies. Link to comment Share on other sites More sharing options...
Stuge Posted June 13, 2012 Share Posted June 13, 2012 Premature! India was never incredible to being with ,but thats a another matter .Right now govt is ready to pulll everything down and they are like .... NO matter what happens we will win the next LOK Sabha elections .Hence ,Govt isn't worried about the reforms which are needed to escape from future trouble. Link to comment Share on other sites More sharing options...
vipin Posted June 13, 2012 Share Posted June 13, 2012 The reforms needed now on are hard steps that will aleinate a lot of people. Labour reforms. Energy reforms. Infrastructure and manufacturing reforms. Monetary policy reforms. The government does not have the balls to do that from here. Link to comment Share on other sites More sharing options...
Needforspeed Posted June 13, 2012 Share Posted June 13, 2012 The traders lobby scuttled FDI in retail. This is one of the biggest reason for the fall in FDI in India. In addition the retrospective IT law and the total policy paralysis also has impacted investment in India. Its not just about new reforms. Even the existing projects are getting stuck due to lack of clearances. We have a govt which doesn't give a damn about anything except to hang on to power at any cost. Link to comment Share on other sites More sharing options...
Mariyam Posted June 13, 2012 Share Posted June 13, 2012 The reforms needed now on are hard steps that will aleinate a lot of people. Labour reforms. Energy reforms. Infrastructure and manufacturing reforms. Monetary policy reforms. The government does not have the balls to do that from here. The others I can understand, but why labour reforms? Compared to most countries in the vicinity ( including China, Malaysia, Taiwan etc) we've the most humane labour laws/practices.I'm talking of mid scale and large scale mnfg set ups here. Not just on paper, but in practice too. So much so, that it comes in the way of being competitive in the manufacturing of certain products. Leave aside adherence to safety standards (which de jure, all companies should follow) I think a worker in an Indian industrial set up is better placed than his peers in the neighbourhood and in the vicinity. Link to comment Share on other sites More sharing options...
vipin Posted June 13, 2012 Share Posted June 13, 2012 The others I can understand, but why labour reforms? Compared to most countries in the vicinity ( including China, Malaysia, Taiwan etc) we've the most humane labour laws/practices.I'm talking of mid scale and large scale mnfg set ups here. Not just on paper, but in practice too. So much so, that it comes in the way of being competitive in the manufacturing of certain products. Leave aside adherence to safety standards (which de jure, all companies should follow) I think a worker in an Indian industrial set up is better placed than his peers in the neighbourhood and in the vicinity. That exactly is the problem. Companies are unable to hire and fire as they like and the labor unions have got too much power and too many rights. These things need to be rectified (which is what labor reforms mean). Economically speaking, if allowed to hire and fire at will, more manufacturing companies will be in a position to set base in India and the labor employment will increase. But the government does not have the balls to implement such laws. Link to comment Share on other sites More sharing options...
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