Reference Auto

So, the Congress finally managed to ceremoniously bid farewell to Pranab Mukherjee as finance minister for not doing enough to revive the economy.

Let alone resurrect the economy, Pranab babu probably did just the opposite as finance minister and the only way the Congress could see hope in the next general elections (in 2014) was by keeping him in the pavilion or relocating him appropriately (as President of India?).

Therefore, Pranab has been given an honourable exit, and in a few months, will live lavishly at Rashtrapati Bhavan for five years.

Immediately after Pranab’s exit, Prime Minister Manmohan Singh swung into action, reviving his team of 1991 – comprising Montek Singh Ahluwalia (now the Planning Commission deputy chairman) and C Rangarajan (economic advisor to the Prime Minister) along with himself, to run the show.

The markets responded positively to this move and now the Sensex is almost at a healthy 17,400 points (after hovering around the 16,500-points mark for quite a while).

Pranab had made the economy unmanageable. Prices of essential items such as vegetables had hit the roof, petrol prices touched unprecedented levels, electricity bills soared, the stock markets looked bleak, national growth plunged and India’s global rating turned from stable to negative.

All this could spell disaster, and taking into account the Euro Zone slowdown, things were reaching unimaginable levels. The middle-class Indian was being squeezed from all directions and there is nothing left of him now.

However, with Montek, Rangarajan and the Prime Minister himself coming into the picture, things could improve. But how?

India cannot live in isolation and the first thing the central government needs to do is get back the confidence of global investors by putting reforms in the fast lane. The best way to do this is to open up the retail sector to foreign direct investment (FDI) as a start.

FDI in retail will not only allow foreign brands into the country. It will also bring a sea change in the supply chain infrastructure across the nation (including villages) and also provide direct and indirect employment to lakhs.

For this, the Centre will have to come up with a policy and do a balancing act – to bring in FDI into the retail segment as well as placate the opposition and allies.

Also, Manmohan’s 1991 team must bring about a situation so as to create demand for products to spur growth. Like, if the Reserve Bank reduces home loan and auto finance rates, it will give a fillip to the demand for cars. When demand gets a boost, it brings back prosperity.

Also, the central and state governments must check hoarding to tame veggie prices and could perhaps introduce a rate chart for vegetables and other essential items on at least a weekly basis so that retailers are not able to fix their own rates. (Retailers overcharge by almost three to five times of their purchase price).

So, if Team Manmohan can bring growth into track, Sonia Gandhi’s (and the Congress) plan to revive the economy by keeping Pranab Mukherjee away will reap benefits not only for the whole country but also her party in the forthcoming Lok Sabha polls.