by the government and regulators helped to handle volatility in the financial markets. However, the global financial issues impacted the economy in the form of moderation in GDP growth, volatility in capital flows and equity markets, Sectors Mining Manufacturing Electricity Basic Goods Capital Goods Intermediate Goods Consumer Goods Index of Industrial Production (IIP) Source: CSO, Govt. of India The new Margaret Thatcher biopic, The Iron Lady, quotes her: “Watch your thoughts, for they become words. Watch your words, for they become actions. Watch your actions, for they become… habits. Watch your habits, for they become your character. And watch your character, for it becomes your destiny! What we think we become. My father always said that”. So, where do we go from here? Evidently our options are limited in an environment, where most elements are critically in ferment. This requires an introspection based on a realistic assessment of the unfolding realities. The dynamics of the underlying forces at work require an accelerated reform process. The RBI’s statement on “Macroeconomic and Monetary Developments First Quarter Review” (July 30, 2012) pointed out: “Decisive policy action, backed by credible commitment to a long-term strategy for correcting macroeconomic imbalances and stimulating investment, is crucial at this stage to revive confidence as well as provide space for monetary policy to help sustain growth while keeping inflation under control”. As the Prime Minister recently stressed, we need to reawaken the ‘animal spirits’ of entrepreneurs with improved governance and initiate second-generation economic reforms to reverse the slowdown in growth. The political and bureaucratic system has to provide the prerequisites to growth and facilitate decisive action on contentious economic issues. April 2 L? L?? LK??
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