EU?s distress
Apropos of the column by Renu Kohli ?Why global growth is still uncertain? (FE, September 11), nations go through economic cycles. The US economy, getting back on track after six years of struggle, is forecast to grow at 3% in FY1% and Japan, after two full decades, at 1.8%. China will touch around 7%-growth in FY15 while Brazil, Russia and India look set to?with structural reforms?regain the lost growth trajectory. All these nations are in command over their own monetary/fiscal policies and over time, will help predicate global growth. But not so the eurozone, which contributes as high as 25 % to the world trade. Shackled at birth, the EU has a single monetary policy and 11 different fiscal policies. That was the genesis of the great euro debt that, at $14 trillion, equals the US’s. Germany may reach a respectable growth figure this year while for Italy, France and Spain, it will remain very weak, at around 0.5%.
When the EU currency was created in 1998, it was suspected that this could prove a recipe for individual profligacy of euro countries that are able to borrow at rates lower than their ability to repay. There is little doubt that the euro economic tale would continue have twists. Germany’s reluctance to act as the family-head and lift up other members is already dragging down its own economy. Even Britain, in spite of being a non-EU economy, is suffering no less due to its age-old ties with the group. The only hope for the EU nations lies in a dramatic economic recovery of all members in fast enough to enable dissolution or amelioration of their huge debt burden by sheer sentiment; otherwise, the Euro boat capsizes and leaves some to sink and others to swim to the shore. The global collective can no longer afford to merely watch as the EU totters from one crisis to another and in the end, pulls down many more.
R Narayanan
Ghaziabad
Just passing marks
The Modi government’s performance in its first 100 days of being in power may, at best, get passing marks. The only path-breaking decision announced by the government is the Pradhan Mantri Jan Dhan Yojana. The fiscal policy of the government underscores the fact that NDA and UPA 2 are twin-like. Though the Prime Minister called for an end to communal riots and communalism, the signs from UP are not encouraging. Inflation remains to be a major concern for the aam aadmi. It seems that we have to wait for the acche din to come.
Kiran Jose
Kerala