How is global economic turbulence affecting India? Is it trying to stay afloat in a grim scenario? The official perception is that even if there is a slowdown in the current year, India remains on the growth path and there is no recession. Already in the first two weeks of November, the banks have released substantial funds to infrastructure and private sector so that ongoing infrastructure projects are speeded up and jobs are saved in industry and commerce. In the month of November alone, the banks are expected to lend about Rs. 40,000 to 50,000 crores to public sector as well as private enterprises. Besides, India expects the World Bank to double its lending to India from $3 billion to $6 billion a year for the next four years. The Finance Minister, Mr. P. Chidambaram, hopes that infrastructure will absorb $100 billion a year--$500 billion in five years—to ensure that India does not lose momentum.

Are these election mantras of the United Progressive Alliance, which has completed four and a half years of its five-year term in office? Are these efforts at the end of the year to boost the morale of the rulers? Parties on all sides of the political spectrum are entitled to talk about their achievements or try to derail the rulers. But the Finance Minister has chosen the forum of annual economic editors' conference to insist that the best achievement is that food grain production has risen by 10 million tons a year and India is now self sufficient and does not have to import grain because minimum support prices and other incentives have encouraged the farmers to produce more. Yet vigil on the food front could not be relaxed.

Farm loan waivers for those who were unable to repay have saved agriculturists, but those who were already engaged in profitable farming and did not default did not have to enjoy the waivers. Apart from that growth in the first four years of the UPA, economic growth had been clocked at between 8 and 9 per cent. Even in the current year, it would be 5.5 per cent, yielding an average of 7.5 per cent for the year. The Reserve Bank was engaged in a pro investment policy and had increased banks' liquidity and encouraged them through monetary policies to cut lending rates and reduce the cost of capital as well as manufacturing.

Besides, India has neither unbridled capitalism, nor does India embrace Communism. Yet it is an open economy. The Communist claim that they had saved the public sector banks by not letting the United Progressive Alliance reduce government investment from 51 per cent to 33 per cent is not borne out by facts and policies. Mr. Chidambaram tries to put the record straight when he is questioned closely and he points out by saying that at the beginning when it came to office in May, 2004, the UPA made it clear that the government would retain majority share in the equity of the public sector and would not reduce it as was proposed during the previous National Democratic Alliance, though not implemented even then. The leftist parties' claim that they had prevented the erosion of Indian banks because of the conditions they imposed on the UPA they supported from outside is incorrect. It is known that even the BJP, which led the NDA, was not allowed by the conservative Sangh Parivar to reduce public holding in banks and insurance, but the UPA insists that it faced no such dilemma even as the leftists have made such claims after withdrawing support to the government a few months ago.

While pointing out that the epicenter of economic crisis was the US and global meltdown visible in Europe and other advanced countries, the government believes that the worst may be over and in a little less than a year, India could return to higher growth than at present. Already, inflation appeared to be under control and price rise has declined to 8.9 per cent and efforts to revive business confidence were continuing. The supplementary demands for the budget in September had released more than Rs.1 lakh crores into the economy. The implementation of the Pay Commission recommendations had released more than Rs. 85,000 crores—money, which would push up sales of durable goods or savings, which remained robust in India. Even remittances to India continued to be good, even as foreign investors had withdrawn a lot of money from the stock market to meet their own needs for cash at home. He had asked industry to reduce prices, including those of property, to stimulate demand and he expected to start doing something about it even as initially they had tried to insist that they would not cut prices. But incentives were being offered to woo customers.

As Herculean efforts continue in the US and Europe as well as in Japan, South Korea and a number of other countries to rescue their economies and banks—incomparable by governments and financial institutions as well as new and old leadership—there is some hope that the present crisis might be moderated. There is also expectation that even though the global meltdown has been unprecedented in a hundred years, the efforts to overcome it are of huge proportions. India would expect the advanced countries to be able to solve their problems so that the cascading effects on the developing nations are minimized. The Indian Prime Minister met some leaders of oil rich countries in early November to secure some much needed investment in India as they have huge reserves of cash earned from high petroleum prices. India is a good destination for investment, with regulatory systems firmly in place and very cautious indeed.

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