India & US: A Strikingly Similar Paralysis
Policy Paralysis wafts like an invisible veil of smoke into a room full of card players with cigarette stubs lying on their ashtrays, and goes almost unnoticed until someone begins to sneeze. The 2 largest democracies in the world have come from opposite ends of the growth curve, and now seem to be treading down the same road to nowhere for a whole host of reasons.
The US has been on a tepid recovery as far as the numbers go, although the number of jobless citizens out there still spells worry. Recent studies show that the US would grow at approximately 2% this year, which is leaps and bounds ahead of Europe, which at this stage is still stuck with its own economic malaise.
The 2nd largest democracy in the world however still has a looming 15 Trillion dollar debt problem which stands out on the world stage like a perennial eyesore, perennial because it would take a lot of courage and discipline to set right. The American Congress in the meantime, does not have the appetite for any more constructive decision making unless they are compelled to.
The largest democracy, India on the other hand appears to have fallen from the grace it had only a few months ago. In February this year, to an attentive and burgeoning middle-class, over a televised budgetary address, the finance minister proudly projected an 8.5% GDP growth for this fiscal.
Little did he know then, that by Christmas, a whole host of factors which include supply side pressures along with external conditions both within and beyond his realm of control would mercilessly throw these figures out of the window.
It is easy to point of that the policy paralysis in the 2 largest democracies have different root causes. In the US, it has been the result of severe ideological differences. One party thinks that a Robin Hood Tax on the rich coupled with increased Government spending is the way out of a recession while the other thinks that Government is in fact the problem!
In India, it has been incoherent policies and intra-party fighting between ministries about the right way ahead clubbed with the odd multimillion rupee scandal that grabs the headlines every now and then.
Having reached this regrettable state of paralysis, there are 2 key points that must be noted. Firstly, Paralysis is a Government operating under Crisis.
Paralysis simply permits the inertia of inaction to prevail until a disaster unfolds. When forced into action, the path of political brinkmanship will first be embarked upon, until one of the 2 sides decides to blink. The other side would then claim a sort of victory regardless of the outcome. The US debt debacle and the most recent payroll tax hike are text book illustrations of this phenomenon.
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