An early June report of Standard & Poor’s — the well-known sovereign bonds and country risks rating agency which speculates that India may be the first country among Brazil, Russia, India and China (BRIC) nations to lose its S&P investment grade BBB- status labelling it a high-risk country for foreign investment — has shaken the stock exchanges and money markets. However, this damning report doesn’t seem to have unduly perturbed the mandarins of India’s economic ministries in North Block, Delhi although India’s BBB- rating is the lowest investment grade (top grade: AAA) awarded by S&P. A further down-grade will signal investors worldwide — including domestic investors — that the bonds issued by the Union government have been reduced to junk status, meaning there’s risk of government default. In short, it’s a red light to all investors. The Union government’s response to the detailed S&P report, which cited a consistently falling GDP growth rate for the past seven quarters and policy formulation paralysis as causes of a possible rating downgrade, has been a confused medley of flat denials, blaming the European Union debt crisis and other external developments. And the common mantra that emerges from North Block and government agencies is that the “fundamentals of the Indian economy” are sound. This standard government response to all criticism of mismanagement of the economy needs examination. In an economy in which 60 percent of the population is engaged in agriculture production but which contributes a mere 20 percent of the GDP, it takes either grand delusion or outright brazenness to proclaim that fundamentals are sound. The fallout of persistent under-investment in rural infrastructure is that every year, an estimated 20 million tonnes of foodgrains production and 40 percent of rural India’s horticulture produce valued at Rs.50,000 crore, is wasted because of inadequate storage and farmers’ inability to speedily access urban markets. In industry the clock seems to have been turned back on the historic industry liberalisation and deregulation policy initiative of July 1991. Despite a severe nationwide shortage of electricity, constructing a power plant reportedly requires 118 separate permissions and clearances. And according to affordable housing entrepreneur Jerry Rao, a low-cost housing project requires 17 pre-construction and 10 post-construction government clearances which typically take 24 months. Even as agricultural and industrial growth have hit rock bottom, the country’s education system continues to produce millions of school dropouts and sub-standard graduates, while the public healthcare system is allocated a mere 1.5 percent of GDP annually. Moreover the Indian economy with reputedly sound fundamentals is underpinned by perhaps the world’s most corrupt police force and slowest judiciary. The end result: an under-provided, under-educated and unhealthy population under-served by a dysfunctional justice system with little protection from anti-socials. Against this socio-economic backdrop to proclaim that the fundamentals of the Indian economy are strong, is not only absurd, but downright ridiculous. Good opportunity to break Kashmir impasse The 179-page report of three kashmir “interlocutors” — a senior journalist (Dileep Padgaonkar), an academic (Radha Kumar) and a former…
