New Delhi: A worried government has gone into damage control as the rupee depreciated and the current account deficit widened. Prime Minister Manmohan Singh has now laid out a roadmap to boost manufacturing growth over next 12 months and Finance minister P Chidambaram has left for the US to reassure investors. But has the government reacted too late?
The aam aadmi is having a tough time with property prices going too high, rupee becoming costlier and inflation making savings less attractive. With elections looming and Gujarat Chief Minister Narendra Modi preying on middle class anger, Manmohan Singh and Chidambaram are on a rescue act.
It's the rupee first. On Monday after the rupee went below 61 versus the dollar, the RBI and Sebi stepped in and toughened currency trading rules. The Prime Minister and the Finance Minister discussed the rupee situation. The rupee has recovered some lost ground.
Chidambaram is now off to the US for the other important mission - to sell the destination India story again to the foreign investors and big multinational firms. The focus of the meetings by him and Commerce Minister Anand Sharma will be to get investments into infrastructure, aviation and retail.
But the question is whether the fickle foreign investors already spooked by 2G, coal scam and retrospective tax on Vodafone will be convinced so easily. The controversy around the Jet-Etihad deal also raises questions about the will of the government. The economy minders argue that there is no policy regression.
"There is no regression of policies under the UPA government. The UPA policies are policies in the way that was started by 1991 when the present PM was the finance minister. It's actually to the credit of subsequent governments of both the UPA and the NDA that they actually continued these policies," said Planning Commission Deputy Chairman Montek Singh Ahluwalia.
Back home the Prime Minister has been doing the talking. On Tuesday, he met the manufacturers and gave them a roadmap to boost manufacturing. Later this month, he will meet top industrialists and convince them to increase investments.
It's not that all is lost. The government is curbing expenditure to bring down fiscal deficit. It has hiked fuel prices and rationalised subsidies. It is encouraging domestic gas production by hiking prices and curbing gold imports. Inflation is also being brought down.
With global economies slowing down, growth has been impacted. If the Congress hopes to return to power, fixing the economy is something that the government ought to do. While baby steps are being taken, is it too little too late?