Even though the Government might be doing what it can to fine-tune the economic engine, most people can be excused for believing that not much is happening barring dirty politics in and outside the Parliament. News headlines inevitably focus on the on-going confrontation; therefore, the general impression about a standstill government is hard to counter. The onus is on the Government to learn to live with the obstructionism of the Congress which under Rahul Gandhi is set to become more and more unreasonable and cussed than it was at any time before. For, the Gandhi scion, in his anxiety to prove himself as a worthy inheritor, is set to be far more belligerent than may be good even for his own future and the party he leads, by dint of the fact that he was born a Gandhi. The way he has driven himself into a corner on the question of resignations of a number of BJP ministers leaves him no escape route, especially when other Opposition groups are not supportive of his maximalist approach.
Be that as it may, the Government, it is hoped, is mindful of the urgent need to repair the economy and set it on course for 7-8 percent growth this year. It has reason to be cautiously optimistic following reports that notwithstanding the prediction of a weak monsoon by the India Meteorological Department, rainfall has been normal in large parts of the country. Hopes of a normal monsoon were further bolstered by a private weather forecaster, which, in sharp contrast to the IMD, had predicted a normal monsoon this year. Happily, this would not be a drought year, this much is certain now. In fact, we can expect a good kharif crop this year thanks to normal rainfall. Normal monsoon also should help food prices keep in line, and thus allow the RBI to consider a good hard look at the policy rate on August 4 when it is set to present its next monetary policy review. Though the Government can feel some relief at the likelihood of a normal monsoon in the August-September period, it will be well-advised not to take its eye off the urgent structural reforms which can greatly boost the economic sentiment.
A global credit rating agency, Moody’s Investor Services, which only in April had hinted at raising the outlook for the economy from stable to positive, has now flagged concerns about the slow speed of reforms. In particular, its sister organization, Moody’s Analytics, has spoken of the current stalemate in Parliament which has stalled progress on the GST and the land bills. These two legislative measures, it has noted, are critical for pushing economic growth. Undoubtedly, the Government erred in making changes in the land law a prestige issue. The promulgation of ordinances to affect these changes in the 2013 law when the Government lacked the requisite numbers in the Rajya Sabha was ill-considered. However, it may have hit upon a solution, insofar as each State would be free to review the central law as per its requirements and possibilities. This should bail out the Centre as far as the land acquisition law is concerned. But the more significant GST Bill ought to be passed in the current monsoon session itself if it is to be implemented from the next financial year.
Despite the logjam in Parliament, the Government seems to be in a position to enlist the support of such groups as the TMC, SP and the BSP to push it through in this session itself. This would be a major step forward and boost the economic sentiment like nothing else this government has done so far. The Cabinet is set to approve the changes suggested by the GST parliamentary committee which also had members from the Congress Party. Though the Congress is determined to stall all legislation, even if it may be the one it had itself proposed while in power, other parties can be roped in for the sake of larger national interest. Meanwhile, the Government will be well-advised to devise a short-term plan to neutralize the willful obstructionism of the Rahul Gandhi-led Congress. Even when reduced to a mere 44 members in the Lok Sabha, the party is being a nuisance in and out of Parliament. Since he has no intention to cooperate even when the national interest is at stake, the Government must take the battle to him and effectively neutralize his audacious challenge.
