Apropos of the editorial “Baptism by fire” (FE, August 7), in three short years we have been hit by an avalanche of problems. First a sticky inflation, then the high fiscal deficit, an elevated CAD and now an ever dipping rupee value. The economic maze is getting complex by the day and no one wiser for an exit route. The similarity of our predicament to Brazil is uncanny. If this BRIC compatriot’s economic boom for much of the past decade was driven by exports of iron ore, grains and other raw materials, mostly to China, we were at a steady 9%-plus growth not from raw material exports but by dint of a broad-based progress be it industries or a global IT services sector or even positive agri indices. In Brazil, the commodity bonanza caused a surge in the real (currency) and an erosion of the country’s industrial base; a typical case of the “resource curse”; its manufacturing output fell drastically. In contrast, India, having survived the 2008-09 economic tsunami and thriving too, allowed a runaway political philosophy of inclusiveness and administrative recklessness to take over. A heavy drain through subsidies and welfare programmes that bred waste and inefficiency resulted. Graft and lack of accountability in a coalition set-up saw the gains of growth getting frittered away. A 30% crash in iron prices this year and wide-ranging commodity slide have stalled recovery and left Brazil with a CAD of 3% of GDP. This is an external factor and the scenario could change for the better. We are worse as our adverse factors are all internal. Foreign investors are withdrawing funds due to decreased level of confidence in our economy and the absence of any cogent approach to set things right. Given the dire need to pull ourselves by the boot straps from such base levels that cover a gamut of factors be it policy, planning, effective and quick administration, particularly our systems of political governance, it is too naive to think that even given the broadest of shoulders, the new RBI governor alone can sustain such a huge burden of this nation.
R Narayanan, Ghaziabad