NEWSPAPERS and business leaders in India savaged the government on Friday (June 1), laying the blame for the country’s worst growth figures in nine years at the door of Prime Minister Dr Manmohan Singh.
The data for the January-March quarter released on Thursday (May 31) showed expansion in gross domestic product of just 5.3 per cent, high by the standards of developed countries but a severe disappointment in once-booming India.
“Goodbye 2020, Hello 1991!” declared the front page of the Economic Times, implying India was heading back to the early 1990s, when it required a bailout from the International Monetary Fund (IMF).
Many commentators described the figures as a wake-up call for the left-leaning coalition government, elected in 2009 but since riven with infighting and sapped by a string of corruption scandals.
In addition to the GDP figures, India’s other indicators are a source for worry: the rupee is at historic lows, annual inflation remains high at around seven per cent, while the current account and public deficits are large.
Policymakers are also constrained. The high public deficit means there is little scope for extra government spending to spur the economy, while high inflation makes cutting interest rates difficult for the central bank.
Ideological differences in the coalition and distractions over corruption scandals mean the government has also been unable or unwilling to push through reforms to open up the economy and cut red tape, analysts say.
The daily business newspaper Mint told its readers to prepare for worse after Thursday’s shock data, which also showed GDP growth in the full fiscal year to March fell to 6.5 per cent from 8.4 per cent in 2010/2011.
“India has landed in this muddle because of the spectacular mismanagement of the economy by the United Progressive Alliance,” it declared in an editorial, referring to the coalition headed by the Congress party.
The dual leadership of Dr Singh, an economist, and the boss of the Congress party, Sonia Gandhi, should be “junked right away”, it said, while warning ominously of a return to the unrest of the 1970s unless the economy improved.
The Times of India, the biggest-selling English daily, said the government “looks increasingly like a rabbit caught in the headlights and unable to get away”.
“The shock GDP growth figure… demonstrates just how badly chaotic governance and policy paralysis have hit the economy,” it said in an editorial.
The Indian Express stated the government should acknowledge its problems, echoing criticism from others that Dr Singh’s administration has been too quick to blame India’s economic woes on the effects of the eurozone debt crisis.
“What will it take for the government to wake up from its complacency about the India growth story? India is sliding into a growth stagflation from which it may be hard to recover,” it said.
In the business world, leading corporate lobby groups the Confederation of Indian Industry and Federation of Indian Chambers of Commerce and Industry renewed their calls for economic reforms to jumpstart growth.
“This is truly a missed opportunity,” Sajjan Jindal, the chairman of JSW Steel, told the Economic Times. “At a time when the whole world is looking to invest in developing economies, internal issues have plagued our nation.”
