No time to pause
Brent crude has dipped again and that portends a stasis in global economy. Added to this is the end to quantitative easing in the US and simultaneous fresh stimulus in Europe and Japan has created an unsteady monetary regime which creates disproportionate FII flows to our economy. These largely go into Indian stocks that are notoriously overvalued and not to enabling infrastructure projects that are needed to complement efforts at growth. In the absence of tangible and forceful reforms/policies over a gamut of enablers—power, land acquisition, labour, skill upgrade—companies are loathe to expand capacity. As a result, these speculative inflows, besides spurring inflation, produce neither growth nor additional jobs. Capital investments must be encouraged as never before and good governance is relevant here. We have a stable government now with a clear task ahead. There is a small window now, with lower fuel prices and falling global prices of farm produce, that would keep inflation in check for a while. The next few months must trigger a spate of reform initiatives and necessarily lower key rates. We may not get such a scenario later.
R Narayanan
Ghaziabad
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