– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –
By Hugo Dixon
LONDON (Reuters Breakingviews) – India can’t afford to be soft on corruption. The government’s lacklustre response to a series of scandals isn’t just woeful; it is symptomatic of a general lack of reformist zeal which could drag down the country’s medium-term growth.
India’s big success in the past two decades has been to put behind it what used to be called the Hindu rate of growth, roughly 3.5 percent a year. The country achieved an average 9 percent growth in the four years running up to the financial crisis. That dipped to 6.7 percent and 7.4 percent in the last two financial years, but is now back to nearly 9 percent. At some time over the next few years, India’s growth could outpace even China’s, as the Middle Kingdom starts to slow.
Manmohan Singh, the prime minister, can take some of the credit for this — for spearheading India’s first dose of free-market reforms in the early 1990s as finance minister. But since his election as PM in 2004 — and his re-election in 2008 — there has been little reform of note, although the government did navigate the financial crisis well.
The biggest stain on the government’s copybook has been corruption. Long a problem in India, this has reared its head in two high-profile cases. First, there was a scandal over the award of mobile telecoms licences which, according to a government audit, may have short-changed taxpayers by as much as $39 billion. Then there were last year’s Commonwealth Games, which were over budget and shoddily staged. Singh was slow to react to the telecoms scandal and is refusing to allow a parliamentary probe into the matter.