The release of macroeconomic data for Q2 of the current fiscal has confirmed that sovereign debt crisis and economic recession in most parts of Europe, slower progress than what was expected in US and the fear of the unknown in China have impacted the frontal indicators of Indian economy.
It is also recognised that more than the declining growth rates in GDP, industrial production and particularly in mining, manufacturing and construction; it is the downward trend of the entrepreneurial zeal and subdued market sentiments that are the real culprit.
In order to face and counter the challenges of global recession, a number of internal steps and policy guidelines are urgently required. Regrettably, the current state of affairs in the governance of the country is not permitting the implementation of these actions. Looking from this angle, the agenda before India is somewhat different from those being faced by other affected countries.
It is also increasingly perceived that the standard prescriptions to combat, say, inflation in terms of monetary policy alone, have overshadowed our concern to enhance production of grain, improve the supply chain thereby limiting the role of middlemen.
In the process while grain prices have started to fall with the arrival of fresh supply, the impact of rise in interest rate is taking its toll on the industry.
For steel, one wishes that the long awaited Mining and Mineral Development and Regulation (MM&DR) Act and Land Acquisition Act will be passed in parliament after due deliberations. However, the current impasse in decision making process has become the primary and singular obstacle in resolving the issue which has a significant impact in pulling down further the market sentiments.
The World Bank report on Doing Business has downgraded India in providing basic infrastructural support for industrial growth and listed various areas where lack of transparency, existence of bureaucratic controls and regulations are really hurting the level of performance.
Why not an interministerial team with suitable representations from the industry be formed to look into these areas where changes in guidelines can work wonders with much less discretionary powers given to the officials manning the departments which would vastly reduce the corrupt practices plaguing the system. A wishful thinking no doubt, but it must be acknowledged that the current slowdown in the country largely owes to our failure to decide on the policy front. Global crisis is truly a phenomenon, but who is preventing us from putting our house in order.
* The author is DG, Institute of Steel Growth and Development. The views expressed are personal