More Laughs from Political Leadership

“There is a silver lining in this crisis,” Chidambaram said. “We have to seize the opportunity to review and revisit pending reforms.” He was speaking at the Economic Editors' conference on 24th Nov. So now it is clear, direct from the horse's mouth - there is no opportunity to move on pending reforms until there is a global crisis of such magnitude that the whole world is shaken in its aftermath.
http://www.bloomberg.com/apps/news?pid=20601091&sid=acU4Tmov9lzg&refer=india
"India is nowhere near a recession, although the country faces a difficult situation, the finance minister said. " Everyone knows that the definition of a recession is two successive quarters of negative growth. I am not sure that any of the economic editors and analysts have ever mentioned recession as a possibility for India. However, in India's context, anything less than the high of 9-10% is equivalent to recession.
"India has, if I may say, weathered the crisis,” Chidambaram said. “We paid a price in terms of inflation, but we still recorded high growth. I hope that the worst is over.” The worst is just beginning. But FM will be gone.
“The fundamentals of the Indian economy have been strong and continue to be strong.” FM cannot tout this theme for much longer. Apart from savings and investments, there is hardly much in the economy that remains strong. The economy has never been more vulnerable than it is now, except in 1991, when again the Rajiv Gandhi government had swept ills such as high public spending under the carpet.
Unfortunately, high public spending has again become the accepted way to deal with the crisis, and since everyone is talking about doing it, it must be right. It is only a matter of days before strong action will be announced by the Gorement - a committee will be set up. It might even have a deadline to submit its report. Rs 50,000 crore stimulus plan will be studied. By that time, elections will have come and gone.
A real stimulus? Slash interest rates, announce steep direct tax deductions, withdraw taxes that yield less than a certain amount and cause more administrative hassles, reduce prudential norms for SME even if that leads to slightly higher NPA down the road, disinvest from banks immediately. These can be done tomorrow without discussion. If Gorement does not seek consensus in announcing Rs 60,000 crores loan waiver and can add an extra Rs 10000 crore because Rahul Baba asks nicely, it does not need approvals for announcing measures that can save us with immediate effect.
Since according to FM the worst is over, if the UPA returns to the Center after the elections, we will have to wait another ten years for a global economic crisis before reforms can be carried out.