The grip of a self-fulfilling prophecy
The virtual meltdown of India's economy and governance is the product of viciously short-sighted politics
If there were any doubts in anyone’s mind about the complete failure of the second United Progressive Alliance (UPA) on the economic front, the events of the last month will have firmly laid them to rest. Through inaction, waffling and economic moves solely aimed at winning the next Lok Sabha elections at any cost, this government has placed the Indian economy strictly now in the domain of self-fulfilling prophecies. And that is very dangerous territory. Because when people—in this case, investors, bankers and businessmen—strongly believe that something is going to happen, what they do based on that belief make their expectations come true. And that process is extremely difficult to halt. Depositors who lose confidence in the bank they have kept their savings in, and start withdrawing their money in droves, fail to understand that this very act is making the bank collapse. It’s the same with the Indian economy now.