Thanks to recent survey results, Indias ranking in the last few years has improved from the lowest strata at a much slower space compared to its neighbours and other emerging economies. It would be utterly wrong to say that growth of the economy suffered due to inaction. A good number of policies were drafted but the outcome of these was well below the target. It would be correct to presume that monitoring of the policies at the implementation stage was extremely weak. The cost of these shortfalls was enormous.
Alliance politics was responsible for the Centre being magnanimous while the funds allotted against specific projects got diverted by the state. Non-food credit by banks is generally a positive indicator of industrial growth. The corresponding jump in NPAs by the corporate sector speaks poorly about the utilization of bank loans for productive purposes. The secular rise in subsidies for non-food items remained only a misconstrued populist measure with little growth in output.
The current scenario is therefore significantly better to implement growth-oriented policies. Two major aspects need immediate attention. One is transparency and the other is communicating the nuances of policies to the public. The initial observation is that the present government is honestly pursuing a good number of reforms, long overdue in labour, environment and forest clearance, subsidy monitoring, insurance fund utilisation, attracting FDI and raising resources through ECB. It is giving wide publicity to announcements and is equally adept in communicating the same through media (electronic and print), e-mail and direct dialogue. What is eagerly awaited is a strong implementation framework.
Service delivery of each government department needs to be improved. Departments like food supplies, housing, transport, water supply and all agencies dealing with licences and clearances need overhauling. It will be a big challenge to get rid of the countless intermediates that operate, make a mockery of the system and become the interface between the common man and deliverable agency.
The rise of the Sensex (crossing 27,000) is generally viewed as speculative, but has the potential to boost business sentiment. The news of the US continuing with quantitative easing by cutting down its bond purchase without increasing the interest rate till the middle of next year has helped the Sensex move up.
But the main contributing factor was the announcement by Bank of Japan of a stimulus measure of bond purchase of $725 billion to help the sagging Japanese economy (negative real interest rate). It is reported that in Q2, capital goods firms like BHEL and L&T received more orders compared to last year and values of industrial investment for which IEMs have been signed this year exceeds last years level. However, negative movement in the capital goods index would turn positive when these orders actually see the light of day.
The crux of the matter is that irrespective of the first sign of a positive signal which the current scenario can boast of, the big bang can happen only when the bricks and mortar throw off the dust and break the soil. Till such time let the various indices rekindle the level of expectations to ultimately reach a crescendo.
The author is DG, Institute of Steel Growth and Development. The views expressed are personal