Last Friday Prime Minister Manmohan Singh sought to frighten the nation into accepting his set of ‘reforms’ by repeatedly warning that the country was on the edge of economic collapse just as it was in 1991 when he stepped in as the savior-reformer finance minister. The fundamental question is what and who brought the country back to the 1991 position when economic collapse stared it in the face? Between 2004 when Singh became the first nominee prime minister ever to hold that position in the country and now it is eight years. That is long enough time to assess his impact and now he admits that after eight years of his rule the country is back or about to be back to the 1991 position. So here is ‘progress’ by going backwards! The Congress and government spokesmen have been for the last few weeks saying that rating agencies were about to give a negative vote for the Indian economy. Such negative rating would turn Bonds by the Indian government into ‘junk’. This, in turn, would dry out any foreign investment into the country whether it is on the portfolio account or as direct investment. India would get no import credit abroad and the rupee, already precipitously falling, would be going down further. Now if the economy is performing so badly it could not have been an overnight phenomenon. The eight years of Singh and his party’s leadership has been steadily pushing it down. The PM claimed in his TV broadcast that the 8.2 per cent average GDP growth over these years was a record. What the reality was that it created a fantasy of high growth in the first five years. The holes began to widen and in three years the shine was gone and the tears widened to turn the claim to shreds. What were the last three years’ buzz word from even non-political players in the economy? ‘Policy paralysis’. Last May the Indian Express report on the economy had the following headline: ‘Policy freeze derails `5lakh-crore worth projects’. This means over 500 projects, mostly in power and steel, being shelved or put on hold during just one year 2011-’12. The estimate came from independent economic analyst CMIE. When core sector projects are either abandoned or held back how can the economy progress? One major reason is that the Centre is yet to finalise the land allotment policy. Not only UPA allies, even the Congress itself is in several minds over the policy. Just go through the note that rural development minister Jairam Ramesh has sent to the PM against commerce minister Anand Sharma’s view and vice versa on land for industry. That problem is yet to be settled. Policy freeze became the byword about this government over the past three years and more. In 2011 some 14 eminent persons issued a statement about this paralysis. Even the PM’s council of economic advisers admitted the grave situation with fiscal deficit rising and needed policy decisions not coming forth. Only a month back the Economic Times analysis revealed that Indian companies, both public and private sector, were sitting on a cash pile of `9 lakh-crore accumulated over last four years. Even government-run Coal India with `60,189 crore surplus was not investing even at a time of huge coal shortage in the country when 30,000 MW of already created power generating capacity idled for want of coal. Coal India was not willing to invest in opening new mines because the environment ministry was not giving the required clearances; even a 25 per cent increase in mining in existing mines was not being cleared. This after both the coal and environment ministries being presided by Congressmen. What was the PM doing all the time during this paralysis? Then there is the grand fiscal deficit boosted by the ballooning subsidies. The RBI reported in this June that ‘the Centre’s gross fiscal deficit rose sharply to 5.8 per cent in 2011-’12 from 4.9 per cent in 2010-’11’. Revenue deficit constitutes three-fourths of this, which means this deficit was alarmingly rising revealing serious lack of government expenditure control on non-plan items. Inflation continues to climb and the RBI’s latest interest policy reveals there is little prospect of it going south. Likely overshooting of subsidies pose fiscal risks during 2012-’13. They had overshot last year and also the year prior to that one. The Congress is particularly adept in blaming the states for every crisis it faces. However, look at what the RBI says: ‘In contrast to the Centre, the consolidated revenue account of the states (excluding Mizoram and Manipur) showed a marginal surplus in 2011-’12 as compared with the revenue balance on 2010-’11.’ Read along with it the fact that many states, significantly the BJP-ruled states of Madhya Predesh, Chhattisgarh, Gujarat, Bihar etc, have shown better performance in state-level GDP growth than the Centre. The policy paralysis, rising subsidy leading to rising fiscal deficit, a government resigned to this restricting investment, fall in household savings and investment, corporate investors sitting tight on their huge cash what does it all say: a government that does not work. Where has the Congress government taken the country in the last eight years of its rule? At the international level, apart from the mocking write-ups about Singh’s government in the Time and Washington Post, here is one trenchant assessment: ‘Credit default swaps suggest that India is already a bigger investment risk than emerging markets such as Vietnam and more than double the risk of fellow BRICs (Brazil, Russia, China and South Africa)’. On malnutrition, international reports club India with African countries like Angola, Congo etc — even lower than Pakistan. The last four years more particularly have seen the GDP growth forecasts all proving to be wrong with the projects steadily falling, the latest by S&P’s takes us to the region of 5 to 5.5 per cent, a perfect setting for the old crawling rate of growth also under the Congress regimes 1947-’77 and ’80-’89 and ’91-’96. Singh continues that denial stance in a bid to gain popular approval to his unpopular steps even as the basic issues like governance deficit, fiscal deficit, trust deficit between Cabinet and bureaucracy, the Centre-State operational deficit (see the rift between them over GST or FDI for instance) remain unresolved. The root cause is the leadership deficit, a by-product of an environment where the Congress president has all the power and little responsibility and head of the government has all the responsibility but no real power.