Reserve Bank of India governor Shaktikanta Das has urged the country to resist the “mood of gloom and doom" that hangs over the economy. Insufficient optimism, of course, can be a problem under any economic circumstances, if only because growth does depend on the “animal spirits" of investors to some extent. In times of an acute slowdown, sentiment can be “very important", as Das rated it. He conceded that adopting a Panglossian smile in the face of difficulties would be unrealistic, but his message was clear: talking up an economy is always better than talking it down. That all top officials need to do it goes without saying.
Whether business leaders and economy watchers can earnestly join such an exercise, however, is not clear. Uncertainty on various fronts has placed a premium on rational analysis, and most signals are downbeat. Also, credible doubts over official data on the economy’s growth seem to have generated an air of scepticism. So, even good news tends to get discounted by some. Under these conditions, a mood upswing would call for a set of concrete measures that go beyond the usual toolkit to tackle a cyclical slowdown. Monetary or fiscal easing is unlikely to be enough.
The ball, in that sense, is in the government’s court, rather than RBI’s. Ever since New Delhi’s admission of the urgent need to address India’s economic woes, it seems inundated by advice. Much of it, alas, is piecemeal and sector-specific. Whatever action it takes must not only be broad in scope, it must also have a coherent economic vision at its core. If these two criteria are met, the economy will surely talk itself up on its own.