The economic data for May—the month Narendra Modi was sworn in as prime minister—inspire confidence. Exports registered a double-digit growth, compared to April. Inflation that covers prices of grains, pulses and vegetables also came down. What’s more, industrial production was the highest in 13 months. True, the data are too thin to skate on. A better analysis will be possible once the figures for June are available in a month’s time. Nonetheless, the trend suggests that the economy is at long last on the rebound. With the right policy decisions, it should not be difficult for the government to consolidate the trends of growth and put the economy on the fast track.
While the May figures provide Modi something to build on, the future depends on how he tackles the situation. There are, of course, no short cuts for growth. The noises made by the new government so far have been encouraging. Now is the time for action. Finance minister Arun Jaitley’s maiden budget will show how the government plans to catapult the economic growth rate to a double-digit level. The prescriptions for growth are too well-known. For instance, the stalled economic reforms need to be kick-started. The government must realise that reforms in any sector are a continuing process and they should never be slackened, let alone stalled.
The best term that characterised the functioning of the UPA government was “policy paralysis”. Riven as it was by conflicting views on economic issues even within the Congress, it found inaction as the best action. Fortunately, Modi does not face any such problem, as he enjoys a clear majority in Parliament. Also, he does not suffer from self-doubt. Investment proposals worth thousands of crores of rupees have remained just that. Timely decisions, whether on land acquisition or environmental clearance, will go a long way in facilitating investments, foreign and domestic. Some of these decisions may not be palatable to some but they need to be taken in the long-term interest of the economy. For Modi, it is now or never.