Thursday, May 19, 2022
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A Promise Belied

Is the suspension of divestments the beginning of the end of reforms?

A Promise Belied
A Promise Belied A Promise Belied

It was a small stone hurled at the seemingly placid waters of the Indian economy, but the ripples went far and wide. On July 6, the government announced that "taking into account the concerns (of some of the UPA constituents and allies), the prime minister has decided to keep all disinvestment decisions on hold, pending further review". This came just three days after Manmohan Singh said he was "not unambiguously attached to reforms" and we "must compete with the world on our own strength". It was as if the curtains had dropped on economic reforms after two years of flip-flops.

Worse was to come. A whisper campaign that the PM may resign, as he was piqued by coalition pressures and stung by the way his ministers were pursuing independent agendas. As finance minister under Narasimha Rao, Manmohan had offered to resign thrice; so it was easy for the rumour to grow wings. Instantly, markets tumbled, analysts frowned and the world sat up and took notice. Russia’s Pravda described Manmohan as "the boy who stood on the burning deck"; most others said he was "under siege" and helpless. Wasting no time, the BJP called for mid-term polls and a statement on privatisation. Although the PMO clarified there was no truth to the rumour, a big question looms. Is this the death of reforms as we have known it? Will we be stuck at 7-8 per cent growth?

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