Transparency; Missing link of India's reforms

Indian governance is witnessing an unprecedented fall in its global credibility, across the spectrum of economy to polity. Global credit rating agencies are constantly downgrading India’s rating resulting in loss of investor’s confidence while global media is critiquing India’s political leadership in harshest ever accent. The level of corruption and mis-governance has reached to an extent which speaks for itself and is readily perceivable by all. With an acute economic mismanagement, fragmented collation government, at the helm and practically non-functional democracy is bedrock of India’s fresh global indignation. India is now a victim of a major reform deficit ie transparency.

India has plummeted three ranks from the last year in the recent global competitiveness report and ten places since it peaked in 2009. This is a sign of loss of global trust in India’s competitive abilities and transparent markets. S&P (standard and poor) has already downgraded India’s investment outlook and a further demotion is highly a likely event. It is double whammy for India’s image as economy is going to tail spin while high offices of government and political leadership are getting termed as hopeless and corrupt. None other than but the poster boy of India’s economic reforms, Prime minister of India, Dr. Manmohan Singh is regarded the silent and inefficient leader of his corrupt government by Washington Post. Time magazine has also criticized Manmohan Singh by calling him an underachiever in its cover story.  This decay is the result of acute non transparent governance and stagnant polity.

Fact of the matter is that India has grown quite impressively in last eight years. This growth story is magnificent and unmatched. An average growth of 8% in the last decade has created job opportunities and higher income, new technologies and changed lifestyle. The irony of the India is not thus lack of growth but quality of the growth. India has never seen such a rampant frequency of scams in its recent history. Natural resources allocation is specifically marred with corruption and scams. Reform stories are darkened by various scandals from sports to space and mines to marine.

Opening of several sectors and markets for new services and products, foreign capital and all paid us well but somehow our policy makers ignored the fundamental core i.e. the transparent execution of laws for reform processes. Our laws have fast become archaic with the changing time. Watchdog institutions of economy have lost their relevance and grip over the expansion of markets while constitutional bodies have degenerated due to political power-play. This is highly disheartening that we’ve not seen any major reforms in last 15 years to increase transparency in governance. A scam tainted governance has finally culminated at a policy paralysis, ie no positive forward movement.

India politics has reached to the level where parliamentary democracy has come to a standstill. Political parties are settling the score ignoring crux of the problem. It’s a high-time for Indian polity to bring the house and order and seriously start a new reform process for achieving transparency in governance. Clean governance is the biggest competitive advantage and transparency is now an emergency for India.  Our contemporary successes are at a grave risk now.

Joblessness : Pain refreshed

India’s perennial scare of unemployment is looming large as economic growth is going to a tailspin.   GDP growth was the slowest in nine years during the first quarter of FY 2012 and the second quarter is likely to witness a similar fate. Index of Industrial production again contracted for the third time in last four months creating the fear of job cuts in Indian industries. This slowdown comes at a time when the country already faces job loss in rural area due to rainfall-deficit. Services sector, India’s new job engine is also slowing down due to lack of demand and rising cost.   

Slump in industrial growth thus can be taken as the worst in the decade. It shrank 1.8 percent due to a deep dip in manufacturing which constitutes about 76% of the industrial production. This slowdown in manufacturing is further aggravated by shrinking exports to recession-hit Europe and slowing U.S. Apart from this the capital goods which has shown growth only once in 10 months also slumped 27.9 percent. Consumer goods industry is also lackluster because of shrinking demand and price rise. Slowdown in manufacturing sector has already dried up potential for higher jobs in industries. The blue collar jobs are now at stake with an increasing pressure of production cuts.  Collapse in industrial production indicates that corporate investment is going to dry up more hence new job creation is just impossible for next six months to one year.

Reserve Bank of India and Central Bank are in deadlock whether or not cut down the interest rates. India’s interest rates are among the highest in major economies. It is very important to ease the rates in order to stimulate demand and encourage investment. RBI is pressurized to make rate-cut but high inflation is playing a spoilsport. Inflation is a notorious demand dampener. Price rise is now gripping the services sector and resulting less demand, lesser investment and reduction is jobs.

India has witnessed a remarkable improvement in jobs market with the help of rapid economic growth of recent years. Unemployment rate has significantly reduced during the last decade. This is the first serious blow to the job market after many years. Economic slowdown is just not taking its toll from potential of jobs creation but it is also forcing industries for painful job cuts.  Joblessness, India’s perpetual socio economic riddle has become a more complex ordeal now.