Why the country will pay the price for its wildly overrated prime minister.
BY SADANAND DHUME | JULY 9, 2012
Is India’s economic juggernaut in danger of turning into a train wreck? Not so long ago, it seemed that the country’s rise couldn’t be stopped: the economy was expanding at nearly double-digit rates, and everyone from global shampoo manufacturers to Western think tanks was racing to put an India strategy in place.
But by the first three months of 2012, GDP growth had slowed to a nine-year low of 5.3 percent, its eighth straight quarterly decline. Now, scarcely a week passes without news of the rupee nose-diving to a new historic low against the dollar. In a report last month, credit rating agency Standard and Poor’s warned that India risks losing its investment grade rating and becoming the first “fallen angel” among the four BRIC economies. This comes on the heels of a slew of warnings by pundits that India can no longer take economic success for granted. And it’s not simply a question of riding out the current global slowdown. Flawed government priorities, poor fiscal management, and rampant corruption all threaten the inevitability of India’s rise.
It may be too early to fundamentally reassess India’s prospects. A young population, relatively high savings rate, and the lowest per capita income among the BRICs give the country the potential to return to the nearly double-digit growth rates it enjoyed until 2010. But if India’s economic future remains uncertain, one thing is clear: along with the fate of 1.2 billion Indians, one man’s reputation hangs in the balance. Will 79-year-old Prime Minister Manmohan Singh go down in history as the bold economic reformer who lifted India out of poverty? Or will he instead be remembered as a pithless technocrat whose government was, to borrow the assessment of historian Ramachandra Guha, “inept and incompetent beyond words.”
For now, it looks like history will not judge Singh kindly. Over the course of his prime ministership, he has gone from being admired for being self-effacing and honest to being derided for his lack of courage andleadership skills. But now he’s got a chance to prove what he’s made of: On June 27, a day after taking direct charge of the economy following the finance minister’s resignation to run for India’s largely ceremonial presidency, Singh’s office tweeted his intention to “revive the animal spirit in the country’s economy.” He has his work cut out for him, to put it mildly.(more of the article)