It is being observed that the economic crisis which cropped up in early 2010 affecting the economy of European countries and is still scaling up with every passing day, has directly affected the Indian economy too. The Capital is being withdrawn out of Indian market leading to the weakening of Indian Rupee against US Dollar. Despite all efforts of RBI, the Rupee has not yet ceased to depreciate. This has increased the troubles for India as it imports petroleum in huge quantity. The loss of oil sector companies is also scaling up but the Centre is overlooking these realities and not allowing these companies to increase the fuel prices only because of the political reasons. The problem seems to be worsening as there seems no scope to cut the subsidy on diesel. Despite being well aware of the fact that a bigger chunk of this subsidy goes to ineligible people, it is not a matter for the government to sit idle instead of taking measures to handle the matter aptly. If no step is taken, India may also be faced with a similar situation those of the European countries.

The present economic crisis prevalent in the European countries such as Greece, Italy, France, Spain, Portugal and Ireland has appeared because these countries denied to run their economy as per the canons of economics. They continued to run a deficit economy. There came a situation in which some European countries especially Greece and Spain reached on the verge of economic bankruptcy. Their economic crisis also affected the economy of other European countries. Now it seems that the crisis has endangered the unity of the European Union. It hardly seems possible that the economic condition of the crisis hit European economies will improve in near future. It is also not clear as yet whether these Europeans countries are ready to abide by the hard decisions which are necessary for putting their economies back on track. The people of these countries are not ready to adapt to such decisions and they want to see ouster of the ruling parties from power in those countries.

The system of subsidy which is prevailing in India at present was once in vogue in European countries. It is believed that this culture has ultimately shattered  the economic conditions of these countries. No doubt, every country has to give subsidy to its citizens who are deprived or underprivileged, but the same culture of giving subsidy becomes hazardous for an economy when it is misused or when it is aimed at vote bank politics or to grab power. When the canons of the Economics are violated then the trend of subsidy becomes highly harmful. Similar kind of situation is being witnessed in India.

In 2009, when many banks and financial institutions in US were declared bankrupt leading to economic slowdown, India was able to handle the crisis, but it is really strange that at present it is holding the European economic crisis responsible for deterioration of its economic condition. The economic situation of the European countries has been deteriorating for the past many years which is pertinent, especially our policy makers are not able to bring out any solution to insulate Euro-Zone crisis. If the countries like Greece and Portugal become bankrupt, it is certain the ripples will go across the world. Has India started to find ways to protect itself from this crisis? After the deepening of economic crisis in the European countries, Finance Minister Pranab Mukharjee had said India cannot stay unaffected from this crisis and he is getting prepared to take some tough steps. It is irony that on one hand, the Union Finance Minister is announcing some tough economic measures, on the other, he asks people to be calm.What is the reason the RBI is not able to check the sharp depreciation of Indian Rupee.

In the present political scenario, the centre is not giving any strong signal to reassure that it is going to bring radical changes in its economic policies. It is difficult for this government to make its alliance partners onboard for taking harsh decisions on economic reforms. Trinamool Congress is consistently creating hurdles for the government on every step. The regional parties such as AIADMK, Biju Janata Dal which are in power in respective states are also following the footsteps of the Trinamool in this regard. The Centre has been unable to move forward only because of the hurdles created by these parties. The Trinamool Congress bears the similar views like those of the left parties over the issues - Pension reforms, reforms in insurance sector, disinvestment, subsidies etc. Presently the government is shying away from any economic reforms stating that they will add to the woes of the people. Even many Congress leaders share similar views. It is quite clear that these leaders are not ready to accept that people are facing economic crisis  due to void of reforms. If the misuse of subsides could be stopped, it will definitely benefit the common people of the country. It is disappointing that despite looming threat of serious economic crisis, the political parties are concerned with the vote bank politics only.
(An original copy of the article published in Hindi on May 20, 2012 translated by the English Editorial. The author is Group Editor of Dainik Jagran)