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BW Businessworld

The Slowest, Faulty Market Democracy

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India has a serious image problem. Inside and and outside the country. Only about 6 years ago, India was hailed as the "Fastest Growing Free Market Democracy."

This was the brilliant brand India campaign launched at World Economic Forum's annual summit at Davos.

Today, almost every word of this campaign sounds hollow.

India's growth has fallen precipitously. Its no longer among the fastest growing countries. India can't be described as Free Market either. Several sectors are still closed to foreign investment. Economic borders and hurdles between Indian states are still more than the restrictions in multi-country EU. Even as a democracy, India hasn't covered itself with glory. Coalition politics has severly undermined the institution of the Parliament. State level politics has yet to rise to meet the development challenge.

India has been proudly presenting itself as the better option than China. As a rule based democracy. But with the Finance Minister eager to introduce laws with retrospective effect, this argument is running thin. A fresh study reveals that the budget introduced over 25 changes that will be implemented with retrospective effect.

All this could lead to even the growth rate going retro to 5 per cent.

As result of the pessimisic mood, even the good steps taken by the government have been neglected. In the last few months, the government has moved aggressively to improve trade relations with Pakistan. This has deep and positive implications on security and regional growth. India has also developed a mature policy on boosting trade and investment ties with African countries.

Unfortunately, both don't help the domestic growth too much. For domestic industry though, it opens fresh overseas growth options. The way its going, outward Indian FDI will grow faster than inward. Soon, fresh investment by Indian giants could well be lower in India than abroad.

The BRICS summit is on in New Delhi. But several eminent economists say that the I in BRICS could soon be Indonesia. India may find itself to be the weakest link. Slowly, but surely, the other members of this group will strengthen their alliances with other countries. India could be left alone again. Like it was in the seventies, when its only friend was erstwhile USSR.

All this sounds like a doomsday prediction. And this scenario is closer than we realise.

Though, its not too late to turn the ship around. India can grow into being the Fastest Growing Free Market Democracy. For this to happen, domestic leaders must want to take India to this position.

Central Ministers and Chief Ministers are welcomed in every national capital of the world today because of India's current and potential economic strength. They must promise decision making that rises above election rhetoric. In 2008, when the financial meltdown triggered global slowdown, it was thought that India could be among the countries that will support global growth. Now it appears that India can barely support its own growth. Political leadership must commit now to a common minimum economic and development agenda. It will be a shame if a democracy that wants to be seen as a global power does not deliver development. India may soon get an unwelcome image: "The Slowest, Faulty Market Democracy."

(Pranjal Sharma is a senior business writer. He can be contacted at [email protected])