We’ve taken all you’ve given/but it’s getting hard to make a livin…/ I know it may sound funny/ But people everywhere are running out of money…/ We need something to keep us going/ Mr. president, have pity on the working man.These are excerpts from a song scripted by American satirist and singer Randy New man to highlight the pitiable state of affairs in which the American middle class found itself in the early 1970s. Unfortunately, the song is finding resonance in India these days. Quiet like the US of the 1970s, where a recession was preceded by economic growth of a decade and a half is being followed by these difficult times. While America’s setback was a factor of international affairs – Vietnam and Yom Kippur wars – unfortunately in the case of India, it is a case of self-inflicted damage.

As the latest GDP growth figures reveal, we cannot dismiss the current slowdown as a temporary phase in the otherwise remarkable growth story Unless things improve drastically, there may be a permanent full stop on India’s aspirations to become as economic super power and in the process pull billions of its people out of poverty in the near future.

The ignominious disinclination of policy makers to admit that the wrong lies with them (they are busy attributing it to foreign factors), makes the whole situation all the more lamentable. It was surprising to see one of the key members of the incumbent UPA government finding solace even in 5.3 per cent GDP growth rate of first quarter this year. The government is busy convincing people that 5.3 per cent is not bad, considering that other nations are achieving far less and considering that this growth rate is far better than what India has witnessed for the better part if its post-Independence history. In saying so, the government is being highly disingenuous. While comparing to other nations, it is engaging in the sophistry of comparing apples to oranges. Comparing India’s GDP growth rate with that of US or the developed countries of Europe is wrong simply because consistent growth rates over past many years ensured that these countries are developed nations and any growth they register, happens on an economic base that is far greater in terms of per capita GDP than what India has right now.

India’s comparison needs to be made with upcoming countries at a similar level of development and as figures show, our growth is behind China, the Philippines and even Indonesia. Also, if one takes into account a monstrous inflation rate, which has perpetually remained close to 7 per cent and an abnormally high fiscal deficit, then even the meager 5 per cent GDP growth appears so paltry that the ignominious “Hindu growth rate” of the miserable days of the 1970s appears impressive!

One can argue till the cow come home about what went wrong. In fact, it makes sense to ask what went right that ensured that India registered consistent GDP growth rates of above 7.5 per cent for many years in the late 1990s, leading up to the first few years of the new millennium. As observed by eminent author and thinker Gucharan Das, it was achieved not because of the government but despite the government. India was lucky to be blessed with a demographic advantage. A burgeoning young population ensured that consumption and investment, the two pillars of economic growth, were self-buoyant without any help from the government. Many economists have argued that even the 7 per cent annual growth rate that India was achieving was way below the country’s potential.

Conductive policy-making would have propelled us to double-digit growth during those times. It was only a matter of time when unfavorable circumstance internationally would put a spanner in the wheels of the seemingly well-running economy. That obstruction is here and now government role becomes critical. If all is going well due to macro-economic factors, the government’s role is negligible. It is when the going gets tough, the government has to play a proactive role and ensure that the economy is back on track.

Among the many reasons why Franklin Delano Roosevelt is still regarded as the greatest President the US had in the 20^th century is his “New deal”. It not inly saved America from the devastating depression of the 1930s but also upped the sagging morale of a nation that was to go on to achieve global eminence in the years to come.

India today finds itself at a similar critical juncture. At the helm of affairs we have a man who saved Indian from a precipitous crisis in 1991. Often uncharitably, it is mentioned that in1991 he was a mere gate-keeper to history. His critics argue that the situation had become so terrible that India had no alternative but to go for liberalization and Dr. Manmohan Singh just happened to oversee it. But this argument is wrong. It goes to Dr. Singh’s credit that when he got the opportunity, he ensured that there were no half-way measure about liberalization. He could have initiated some half measure that would have kept the world bank and other global lenders happy, but he took a long term view and ensured that crucial Indian sectors were liberalized and received the much-needed dose of investment that spurred the county’s rise in the decade that followed.

It is tome for him to show the same resolve again. It would be presumptuous of me or of any other person to tell him what to do. Being a brilliant economist that he is, he is well aware of this. It is unfortunate that due to some imagined fears of public backlash and political expediency, his government has been very feeble in dealing with the situation and, in the process, adding to the woes of the poor and the needy. It is a pity that he has been busy citing international factors behind our current woes and has been saying that in the long term, the Indian economy will continues to be strong and things will improve. Perhaps, he needs to remember what the most illustrious economist of his alma mater( Cambridge University), John Maynard Keynes, said, “ In the ling term we are all dead!”