The Animal Spirit
The impression one now gets is that our former FM Pranab Mukherjee was doing (or was required to do) a lot of other things rather than focus on his main job then – to get moving on economic reforms, and keep India’s GMP growing at a significant pace. Perhaps that is why as soon as Mukherjee was out of the way, PM Manmohan Singh has taken direct charge. That is why he wants the ‘animal spirit’ back in his government.
Today our economy is perhaps the single biggest concern, and everybody in the industry is very happy to see Manmohan Singh take charge of that front. The new finance minister could decide the fate of Indian economy as well the Congress lead UPA, the present government. If Manmohan Singh does a good job, the UPA government, has a big chance to form the government again in 2014. My assessment is that if our new Finance Minister can turn the economy around – or demonstrate he is taking strong steps in that direction – voters will bring UPA back.
The problem is that the present government seems to have got into a policy paralysis, a term that has become very popular these days. The opposition is in shambles, and the President’s election campaign further proved that. On corruption there is not much to differentiate between UPA and NMA, except that UPA has been punishing the culprits and NMA has been too weak to deal with them. So it is essentially the economy that is the differentiator, and can bring UPA back. There is clearly an opportunity for Manmohan Singh.
The big question, therefore, for Sonia Gandhi and Manmohan Singh should be how will the economy be brought back on the growth path. The job is clearly cut out – control inflation, enthuse domestic markets, create an environment conducive for investments, start market and governance reforms again, and bring back the focus on infrastructure. I see no reason, why UPA cannot attempt doing it in the roughly two and half years they have before the next elections.
While the PM drives finance, he should also re-shuffle his cabinet and get good and effective ministers in other areas too because they will have to finally implement the finance ministers goal. Obviously, equally if not more important will be the need to have all other ministers to work in harmony. Nither the PM or someone will have to make sure that the government works like a single team.
This government has so far been much open to the suggestions and feedback from the industry that in the past, though not much action was taking place after that. I believe this is the time, the industry should unitedly rally behind the Prime Minister and work closely to get things moving. Sources in the South Block indicate in the government once again wants to work very closely with the industry. This is a great opportunity for the industry too.