India faces a crisis of growth

In 1991, when Manmohan Singh rose to present his first Budget as the country's new finance minister, India was reeling under an imminent foreign exchange crisis - which could have led to defaults. We did not have enough money to pay for even two months of imports. The choices staring Singh were stark; either continue with the disastrous economic policies and see India reduced to an economic basket case or seize the moment to usher in far-reaching reforms. He chose the latter option and the rest is history. It was the time for making bold decisions.

Today - for many different reasons - Finance Minister Pranab Mukherjee is at faced with a new set of challenges. Thankfully, the situation is not as desperate as in 1991. Then it was a crisis of survival - now it is a crisis of growth - especially double-digit growth. India's true potential is not in 10+% GDP growth - but a set of recent events have made this seems difficult to achieve. The threat to this aspirational goal of double-digit growth for the next 10 years could be the opportunity for making some bold decisions.

This current threat to the India story is a result of many external as well as internal factors.

The government seems to be caught between a rock and hard place when it comes to the fiscal consolidation. The FM will find it politically impossible to curtail subsidies and funding for schemes like the National Rural Employment Guarantee Scheme (NREGS). Many of these programmes are worthwhile and necessary for inclusive growth, but the key challenge now is get more of limited resources for this as the government's ability to increase outlays will be curtailed in this Budget.

Options to raise additional revenues like using 3G spectrum auction proceeds to bridge the fiscal deficit are no longer available at the same level. Disinvestment is likely to rope in 40,000 crore. So, taxes will have to provide a boost - though the tax revenues are healthy; it is unlikely that in view of rising inflation, individual tax rates will be raised. So, the only option will be to raise some more from corporate and indirect taxes.

Tax revenues for the next year could also be under pressure if the GDP growth rate buckles under the pressure of political pressures and inflationary factors.

The case of inflation control is the biggest issue in front of the FM - it is also probably the most politically sensitive. The classical response till now has been to raise interest rates, which the RBI has already done seven times during the year.

But this has failed to rein in a price rise which is caused by supply-side bottlenecks and inadequate investments in infrastructure. Also inflationary expectations are on the rise, which is dangerous. The FM has to supplement the RBI's actions with tighter fiscal policy measures - to control inflation, for sure; but, more importantly, to rein in inflationary expectations. This is easier said than done as the fallout of this could be GDP growth slowing down.

ET

Europe's biggest Hindu temple to come up in Netherlands

BRUSSELS: The biggest Hindu temple complex in Europe - consisting of three temples, residential areas and tourist spots - is going to be built in the Dutch city of The Hague.

Three Hindu groups would be building three temples on a site behind the Hollands Spoor railway station, EuAsiaNews reported citing the Netherlands' Trouw newspaper.

The complex will include 45 apartments and is set to open in 2014. There would be rooms for yoga and meditation and tourist spots for foreign guests.

The residential towers are also open to non-Hindus.

The Hague council member Rajesh Ramnewash has designed the plan.

Some one percent of people living in the Netherlands are Hindus. The Hindu community also accounts for the largest immigrant group in the Hague, according to Trouw.

et

Government may set up panel to review AI wages

NEW DELHI: Problems relating to disparity in wage structure and seniority among employees of Air India after its merger with erstwhile Indian Airlines are likely to be resolved by a panel chaired by a retired judge. A suggestion that these issues be tackled indepth by a committee headed by a retired judge has been made by civil aviation minister Valayar Ravi during his meetings with leaders of 14 unions of the state-run carrier.

"After a two-day meeting with all the employees' unions of Air India, I have suggested the formation of a committee headed by a retired judge to resolve their issues relating to service matter," Ravi said after inaugurating the Centenary Celebration of Civil Aviation in India here.

The function marked the launch of the first commercial flight in India—between Allahabad and Naini on February 18, 1911. The minister said the unions have agreed to cooperate with the government to bring the national carrier out of red. To questions on lack of manpower integration between the two erstwhile public sector airlines even after almost four years of their merger, Ravi acknowledged that there were "some problems" but said "these can be resolved through talks" .

Asked about charges that Air India had given away many profitable routes, both domestic and international, to private competitors, he said it was "not the time to blame but to run the institution and get out of the situation" . The minister said more funds were needed to bring Air India out of red but refused to disclose the amount, saying he would discuss the issue with FM Pranab Mukherjee before taking a decision.

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India's ambition backed by sound logic

Recollection of the past and reconstructing moments as they may have exactly happened can be a difficult task. An India-Bangladesh World Cup opener evokes nightmarish memories for an Indian fan, of a similar encounter four years ago, on the same grand stage, which produced a result that shattered the Indian dream even before it had acquired concrete shape.

In the faraway land of Trinidad, whose capital Port-of-Spain, known for the Indian Test team's stirring saga of scoring more than 400 runs to achieve a famous Test victory once, is today remembered for India getting knocked out of the 2007 World Cup even before it had begun.

On the eve of this year's tournament in which India, unlike then, have a far more secure, settled and formidable look to it, the Indian team may still be carrying the wounds inflicted on them by a team which we all believed were there to fill in the numbers. Despite the Bangladeshi journalists reminding us that their team could be dangerous foes, we had paid no heed to them, till they pushed us from the perch we thought was ours.

The shock of that premature exit stunned the cricketing world, from a commercial aspect, so much that four years on, we have a format in which all top teams are guaranteed at least a month's participation, regardless of the results.

Not that India needed that charity this time, given the fact that we are the number two team in the world and, by unanimous consent, the strongest contender for the throne.

Home conditions, crowd support, a billion good wishes and multi-million dollar sponsor backing would be enough incentive for a team to jump from the moon and still hope to survive. And even if on their way, they were to encounter rough passages, this team is strong enough to navigate its way towards its final destination.

From a shifting perspective, Bangladesh must be in greater stress and tension as this time around they are not exactly the "underdogs" they were four years ago.

And the reassuring thought for both the teams is that no matter what the result, it is not going to be the end of the road, just the beginning of a long journey.

India, in any case, are not a team to be trifled with and their ambition to become champions has the sound backing of cricketing logic.

Yet the beauty of sport, the reason why we all follow it, is that the outcome is always shrouded in many ifs and buts till the final moment arrives.

At a time when cricket is itself facing many difficult challenges, let us all hope to witness many nerve-tingling, coruscating, edge-of-the-seat thrillers and not the dreary, boring one-sided games, which could sound the death knell of the World Cup itself.

HT