By Vivek Pattanayak in Bhubaneswar, January 19, 2018: As the time for laying annual budget is drawing close, a review of the current political and economic atmosphere of the country becomes imperative.

The Indian economy is likely to grow at the four years lowest despite programmes like Make in India, Start Up India, Stand Up India, Digital India, Swatch Bharat, Beti Padhao, Beti Bachao, Jan Dhan, and drive against black money etc. Notwithstanding a slew of much publicized reform measures taken by the central government by liberalizing Foreign Direct Investment (FDI) including 100% in civil aviation sector, and increasing substantially in sensitive defence sector, lack lustre result is undoubtedly disappointing.

What is worrisome is the rising fiscal deficit. With crude price going upwards the situation becomes all the gloomier. There is persistent trade deficit. Although the world economy has revived, India has not been able to take advantage of it.

Under IT sector profits of icon like TCS have dipped. Mining sector is dormant. Generation of electricity has dropped. Telecom industry does not inspire confidence. Bemoaning picture of safety in Railways is discouraging. The future of the national air carrier is still uncertain. Farmers’ distress due to unprofitable minimum support price, vagaries of nature and usurious debt burden are evident. The central government has been severely criticized for lackadaisical performance in implementation of GST and many have questioned the wisdom of demonetization.

What is damaging now is that USA has issued advisory to the American citizens about deteriorating law and order situation of India with cross-border terrorism, and ultra-leftist armed insurrection which would discourage tourists to visit India. The perception of Europe cannot be different. In addition, reports of rape, abduction, child molestation, suffocating pollution in the National Capital Territory would also have definite severe impact on international tourism which is a source of invisible export.

The country is slated to have general election in 2019. Naturally there is expectation of a populist budget. Scope of raising resources is limited with GST having taken the large space. The obligation to meet payments under the report of the 7th Pay Commission also puts the government in a tight situation. Widening the scope of direct tax is doubtful with election a year ahead. Corporates are looking for reduction of tax, understandably more encouraged by the American example under Trump.

Budget is only one instrument to improve the economy. There are many other mechanisms which can propel growth, ignite domestic investment and bring FDI and FII thus creating job opportunities which at present is the biggest challenge to any democratic government in 21st century. Strengthening defence and law and order machinery would create a good atmosphere for business, trade and commerce to grow, expand, and flourish. Closer cooperation with States and avoidance of confrontation are essential for achieving this.

In the background of this Aadhar issue has generated needless controversy creating a sense of insecurity and the recent hiccup in the judicial domain has not added to the glory of the Indian democracy. Foreign investment is attracted by a stable polity with vibrant but responsible civil society, free but credible media, independent judiciary rendering speedy justice, effective but transparent political executive, an efficient but neutral bureaucracy, and apolitical law enforcing agencies enjoying high public reputation. Thinking people should seriously introspect whether the contemporary India has all these ingredients to usher in lasting FDI and stable FII.

At this stage the World Economic Forum Survey forecasts a riskier global economy in 2018 due to possible political and economic confrontations among major powers with China asserting itself and flexing muscle to fulfill its maritime and territorial ambitions.

One Belt and One Road initiative ignored by India while embraced by its hostile neighbour Pakistan, and supported by Nepal, Myanmar, Bangladesh and Sri Lanka has placed India in an awkward position. Doklam crisis seems to have not waned and with continuing hostilities on India-Pakistan border, defence becomes a priority sector.

Our domestic policies, political or cultural, declared or undeclared, formal or informal, and open or covert including lawless actions by non-State actors have international consequences. Do we have the same traditional support from the Islamic nations mostly from the Middle East being our principal oil suppliers despite us being the second largest Muslim country of the world? Can we count on our age-old friend Russia with our manifest proclivity towards USA? Does the Christian Europe think that India is as tolerant to minorities as it used to be? Can we depend upon USA under volatile Trump? Will Israel come to defend our borders? Is 1971 same as 2018?

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