If there were to be any reason for the government to arrest the policy drift of recent months, it should be the darkening international horizon. Late last week, the International Monetary Fund warned that risks to the global economy have increased.
The possibility of Greece debt crisis morphing into something more contagious cannot be ruled out. Japan is still struggling with spending cuts after the nuclear accident there. Look anywhere—US spending, China’s housing boom going awry and elsewhere—chances are that the global economy is on the edge again.
It makes much sense to set one’s own house in order. India needs to set many things right—from fuel pricing to inflation to deficit spending. It is, of course, in no way comparable with the Greek situation. And that is not the point. The issue is to be prepared to face uncertainty in the world economy and also any unforeseen external shocks.