The Finance Minister Mr Pranab Mukherjee will be delighted that the economy has grown closer to his earlier expectation of 7.2 to 7.5 per cent in 2009-10, recovering from the 6.7 per cent in the previous year. Growth has been fuelled mainly by domestic consumption as the world economy began a weak recovery in the latter half of 2009.

The other factor of satisfaction for the Government is an improvement in the fiscal outlook as a result of a bigger realisation from the 3 G spectrum sales at over Rs.67,000 crore, as against the budgeted target of Rs.35,000 crore. This should help the Finance Minister to succeed in limiting fiscal deficit, as budgeted, at 5.5 per cent of GDP (from 6.7 per cent in 2009-10).

Hopefully, Government would also very nearly achieve the other major target of securing Rs.40,000 crores through disinvestment in public undertakings. He would then have some cushion to make such readjustments in expenditure as may be needed by the exigencies of the situation. For instance, there is under-funding for oil subsidy and Government will have to bite the bullet to deregulate petroleum product prices, and that too in an inflationary environment. If this happens or not, there will be no more scepticism about hitting the fiscal deficit target

But we are still in the early months of the new fiscal year and Government has not come out with its agenda for the second year. Inflation, of which it has been a mute witness to the hardships of millions of low-income people in the country, will continue to haunt the Government in the coming months. To some extent, a good monsoon would make it easier for tackling inflation and it is how perhaps that the Prime Minister has projected the rate of inflation declining to 5 to 6 per cent by the end of December. Such reductions do not mean anything to the people at large. Prices do not decline but may stop ascending further.

UPA 2 had to play down its first year record of “achievements” which was overshadowed by one of the worst disasters in Indian aviation, even as there was a widespread sense of disenchantment over Government's dismal performance and marked failures, especially in relation to critical issues of concern for the common man. With a broken image, its ability to tackle unabated inflation in the immediate months,, revisit financial sector and other structural reforms and remove persisting bottlenecks for infrastructure development had all come under question.

Above all, the country badly needs effective governance, especially at a time it is passing through a turbulent period which we are witnessing day to day with more Naxal killings and train derailments by saboteurs. The second year now on would be of greater challenge to the credibility and stability of the UPA Government which needs greater internal coherence and serious thinking at the highest levels on the basic ills of the nation. Rather than high-sounding speeches and policy refinements, what is urgently required is a many-sided action plan to overcome administrative weaknesses and produce results over the short to medium term.

While the Congress-led Government relied its first year record mainly on India's resilience to maintain growth through a global recession, which in no way makes ours a unique example in the world, it had little to cite other than a Right to Education Act for tangibles. This was reflected in the defensive posture of the Prime Minister at his recent press conference where he believed that the first year of UPA-II had ended with “reasonable achievement” though there was room for “better outcomes“. Mere enactment of rights is no guarantee that the objectives will be fulfilled as intended, and there can be no sense of achievement for our Ministers unless implementation, even at sixty to seventy per cent, takes place. States have to be drawn actively into operationalisation of enacted laws, leaving no room for delinquency.

For 2010-11, inflation remains the hard core issue, no longer one of food prices alone. It is in part a legacy from UPA-I. Government has over the past year lived on assurances and hopes of things improving over time, especially food prices with expectations of normal monsoon. So far, one by one, all the deadlines set for easing of prices including rabi harvest had been belied. The way this issue of vital concern to the populace has been handled over months has made even international observers detect a sense of complacency overtaking the government.

Government looks totally removed from ground realities when it talks of “signs of prices showing a moderating trend”. More than two-thirds of the population belong to low-income categories depending on their labour and have hardly the means to cope up with the level of prices of not only food and other basic articles of consumption such as vegetables but also a variety of products, especially drugs whose prices are being revised up without let or hindrance. Indeed there is no commodity in the market today which has not been marked up, some drastically under the guise of high food prices and rise in transport costs due to fuel price hikes.

Never in India's history since independence had double-digit inflation in food products (including manufactured articles) lasted unchecked as over the last two years (2008-2010). UPA Government has remained clueless on bringing down, even moderately, prices of essential items of daily consumption and has left the problem safely in the hands of rapacious market forces. Top-grade economists in Government have been ever ready to explain away these in their imaginative ways.

Understandably, the Finance Minister has remained focussed on growth. He may now sound with greater confidence about the economy hitting 8.5 per cent this year and “reverting“ to 9 per cent next year. His anxiety for growth is for higher revenue generation, the importance of which cannot be denied. But macro-economic management must take care of actions to tame inflation, not only the rate at the wholesale price index level but also at the consumer price level. The double-digit food prices cannot be allowed to continue into a third year.

Like prices, it would appear jobs are also of not much concern to Government. A 9 per cent growth is deemed as the magic wand to remove all ills that afflict the country. There is no solid evidence of more jobs in organised sectors or greater wellbeing for the masses from the rise in average growth of the Indian economy over the last two decades. The 'business as usual' approach in the Government and the Planning Commission will not advance India toward the cherished goal of inclusive development for the foreseeable future. (IPA Service)