Government and the Economy

Psychologists say that our behaviour is driven by 'recency'. We remember recent events better and those influence our emotions and decisions more. The period between 2009 and 2014, when the government was run by UPA II, was pretty bad. During those five years, the global economy struggled with the aftermath of the subprime bubble. But India's entrepreneurial spirit was crippled by a combination of corruption and apathy. Policymakers and bureaucrats just forgot about trying to change things. Others focused on profiting from their positions. So it felt like India was stuck in a time warp, with things going from bad to worse. The recency of those negative impressions makes it difficult to make an objective judgement about the last nine years, 2006-2015. India has changed in many ways since 2006 and many of those changes have been for the better. There substantial growth over this long period. If we look at statistics such as telecom penetration, improvements in power supply, roads built, etc., there have been major improvements. There has even been significant wealth creation if we look at the stock market. The pity of it is that so much more could have been done if our policymakers had been a little more honest and energetic. Given the recent recalculation of GDP, one can say how much the overall GDP has really grown. But one telling factor is that the economy did not grow much, if at all, in USD per capita terms, for several years. So, while people saw a lift in income between 2006 and 2014, there was little improvement in income betwee

This article was originally published on July 17, 2015.