Chasing the Unviable

Internationally, the existing policy paradigm has failed, and yet, going by the Economic Survey 2008-09, a case is being made for an eventual return to business as usual. For the present though, in these times of global financial crisis and deep recession, it seems “We are all Keynesians now”. For there is no disagreement regarding the imperative of halting asset price deflation and restoring the flow of credit, or over the recourse to loose monetary policy and fiscal expansion, though differences persist, as they inevitably would, over the best ways to go about doing the former, as also over the forms the latter need to take and the degree to which they need to be pursued. But, as regards future growth, although the mantra is one of being “inclusive”, the policymakers in North Block are reluctant to even conceive of it in terms of incomes from labour rising in tandem with the growth of productivity. Actually, the neoliberal policy paradigm has not delivered “inclusive growth” anywhere, if by that we mean growth inextricably linked with an equitable sharing of the prosperity that accompanies it. Indeed, the policy-mix that the North Block policymakers want is one that disconnects the two, further exacerbating inequality.

Chapter 2 of the report, “Challenges, Policy Response and Mediumterm Prospects”, makes no bones about the fact that its authors share the opinion held in business circles that the government “has been slow on policy reforms, in the past five years”. Further, “As long as economic growth was above trend these apprehensions did not matter, but (in) an economy where the industrial (manufacturing) growth has been steadily declining for nearly eight quarters over 2007-08 and 2008-09 with the revival still uncertain, policy interventions are necessary”.