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The year 2015 in Retrospect and Prospects of 2016

Reminiscing into the past to move fast on the promises for a bright future is the usual year end exercise. Many soothsayers lend their voices. The year 2015 is just about to close. Not many are jubilant. Farmers in a couple of southern States and Punjab and elsewhere committed suicides in penury, groaning under heavy private debt.

Parliament had two wash-out sessions, courtesy, the Congress, save just nine Bills passed by both the Houses. All the major reforms, particularly the GST the game changer, are on back burner.

Nature’ fury brought a major metropolis to ruble. El Nino caused havoc in several States turning the cool weather of the year into hot climate. Discussions on Climate changes, Environment, containing terrorism carried an imprint of Indian view making history. PM Modi with his birthday greetings to his counterpart in Pakistan on the 25th December, created waves in international relations although moving on rocks in India.

Expenditure on Defense and Police modernization has increased. Yet civic protection is on thin edge. More chain snatchings, more ATM thefts, and money-on-call crimes, gold smuggling surfaced. Most of the states have been galvanizing to digitization to tame the corruption. Not a single economic offence barring the decade-odd Satyam scam has put the culprits behind the bars and not a rupee of black money has been brought back from Switzerland to India. Cyber crimes continue to show their ugly face robbing the institutions and individuals’ wallets.

States are competing for ‘ease of doing businesses’ more through policy tweaking. Implementation issues and gearing the grassroots administration remain formidable. Hikes in pay and slides in rights make labour moving to roads.

Micro and small enterprises are still fighting for their space in credit markets and their contribution in manufacturing Make in India sector is full of tears. Although Bankruptcy Act gave hope to the India Inc there is still no exit route for the MSEs. Decade after winding up the unit, it receives a claim for payment of EPF where as Sec.14 of the BIFR Act provides relief for the corporate units.

Laws leave more for interpretation than for a conclusive ruling. Speed of justice is yet to roll out. The silver lining is that the Judiciary has been able to gear up the administration to timely action responding to PILs – food security for the poor in situations of drought, asserting the domain of Right to Information Act in certain restricted areas and the like.

Inflation has been tamed. Indices maneuvered to project higher growth thanks to a statistical model. The alert finance regulator reasserted his commitment to growth – reduced interest rates. But amidst rising NPAs credit markets are tepid. Volatility of capital markets amidst global concerns continued and the initial surge of investments has become timid.

Fed Rate hike as expected made its beginning as if the recession unwound. Yuan became the recognized third largest international currency. Amidst stable exchange reserves RBI is confident of holding the rupee range bound. Banks are at their wits-end to raise capital to meet the demonic Basel III norms by April 2017.

2015 in review

Amidst all these India inc posited a positive manufacturing growth. In spite of a slowdown in agricultural and services sector growth, the country is expected to grow around 7.5% this fiscal. Fiscal reforms are still in the boiling waters of the upper house in Parliament. GDP and income poverty are commodity centric and leave many ambiguities. Affluence is not assurance to happiness. Measured by human development index the country is still at the bottom with 137th rank among the 188 nations that the UN assessed for 2015. Among the less happy BRICS we are equals.

Although social welfare index moved up for the country as a whole (R. Radhakrishna et.al) at a rate of 1.36 to 1.53 per cent per annum in rural, and 1.79 to 2.54 per cent per annum in urban areas between 1993-97 and 2009-10, the later years have slowed down. Micro finance report for 2015 of NABARD and CRISIL have given an account of recovery for the year and bright hope for future. Gender issues have been on a good resolution mode throughout the globe and more so in India. Financial inclusion agenda through Jan Dhan and MUDRA have shown better penetration than the traditional efforts. These efforts need evaluation for validating the claims.

Educational deprivation and malnutrition rates vary across states requiring a more cohesive, consummate and consensual approach to education and health access consistent with Constitutional commitment. Can anemic health and education budgets be a thing of the past? I doubt. Privatization is no solution to the ills of these sectors. Closely monitored investments of both human and physical resources from the governments offer more formidable solution.

The promise of good governance by the present government is still in rudimentary stage as cooperative federalism has not yet displaced competitive populism among the states. Riparian issues in river waters among different states continue tensions. Water for the parching soils, safe drinking and industrial production requires a water budget as we have only 4% of the world’s water resource to feed 17% of the world’s population.

The year that started off with wordy war fare among the two newly started States ended with both the Chief Ministers shaking hands and visiting each other in a cordial atmosphere. Riparian water issues have come to a pause. Untimely rains and drought are staring at the states.

While Telangana placated all the religions with grant of spaces and structures and recognizing all the major festivals as State festivals, it also moved fast on digital map of India taking full advantage of the available cyber infrastructure and bejeweled the economy with a progressive industrial policy. But it got a directive to set up a Committee to inquire the issue of farmers’ suicides with a view to resolving the farmers’ economic security.

Andhra Pradesh has been moving from crisis to crisis – sand scams to call money scams and yet faster in implementation agenda on reforms has attracted the attention from global investors to build its capital while on its way to moving the administration to work from the temporary capital around Amaravati. Fiscal extravagance has put both the states in search of grants from the Centre and loans from the public and international aid institutions. The future is getting brighter by the day.
The Author is an economist and risk management specialist.

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