What will make a perfect 2009?

Having learnt all the difficult lessons over the last one year, what can we look forward to in the year that just dawned? What will make 2009 a perfect year, maybe a period we will remember as when hope returned and we started dreaming again? Here is a list, which has a very high proportion of hope and even the implausible.

Obama launches the mother of all stimulus packages
This could well be the defining moment of the year for the global economy and, if rumours are to be believed, there is much to be hoped for. US President-elect Barack Obama has already started negotiations with US senators and congressmen to announce the mother of all economic stimulus packages within days after he assumes office. Early reports put the size of the package at over $700 billion, which is as much as the Bush package announced last year. But, indications are that this will only be an opening shot. Over the next two years, the Obama administration is likely to spend well over $2 trillion to pull up America's economic fortunes. If the American economy recovers by early next year, the world would have avoided a depression.

The big risk is that this stimulus package will be delayed. If the Obama package is to escape the early troubles of the Bush-Paulson bailout at the US Congress, it should be a well thought-out plan which will address the core problems. The Bush-Paulson package has had little effect because they were hoping to make the rules as they go along. The initial proposal was all of three pages and the primary purpose as stated was to buy toxic credit derivatives from investors, mostly banks. After a few months, that idea has been dropped and the focus was shifted to capitalising banks. That was the right move, but recapitalisation of banks should have been the primary focus of the plan right from the beginning. Besides, there were too many other questions left unanswered in the original Bush-Paulson plan. Hopefully, Obama will not make the mistake.

The rest of the world follows
For the global economy to really come out of this slump soon, it will help if the rest of the world sheds its inhibitions and adopts aggressive fiscal measures. This is especially true in the case of Europe and Japan, which are in recession. Europe's response so far lacks coordination and coherence, but that must change. China, India and the rest of the emerging world also need to increase public spending.

It is easy to throw money at a problem. But, nothing may come out of it. For these policy measures to be effective, they should be targeted well to deliver the biggest bang for the buck. The money should be spent on projects that will deliver immediate results and in sectors where there are established institutional structures to absorb large inflows. If the systems and structures are not in place, even a large infusion will not reach the ground and will fail to produce the desired results.

A new world financial order
It is a bit too early to expect global leaders to pay much attention to rewriting the global financial architecture when the economic environment is getting worse by the day. But, sooner than later, the world must start deliberating on establishing a more effective system in place of the outdated system designed for the last century. This requires leadership, coordination and above all, cooperation.

Hopefully, both developed and developing countries will realise that their current economic models are not sustainable. Much of the blame for the current crisis should go to the hugely overblown global imbalances, which are in turn the result of the economic models followed for the last many decades. Now, the spenders of the past must become savers and the savers must spend more. Mercantilist trade policies must end and the world should embrace more integration and open up further, not build barriers around the shores.

Congress - BJP government at the centre
This is a bit too much to hope for, but will take out the biggest risk facing this country today. Current trends all point to a highly fragmented parliament after the elections in April or May. There are no clear winds favouring either the Congress or the BJP and, if there are no dramatic events from now and the election, the two parties will not see any significant change in their current strength in the parliament. Meanwhile, the left parties are picking up key allies and this so called Third Front in the making will muddle the picture further. The big question mark will be Mayawati, who remains as unpredictable as ever.

In that scenario, a Congress-BJP government is the best this country can hope for. Apart from the minor matter of how to define secularism, there is nothing much that differentiates the two parties. Maybe, they can cut a deal without quite giving up their separate identities or merging. They can share the spoils at the centre and continue to fight each other in many states. The parties can have their own prime ministers for equal terms of 2.5 years each. For the sake of continuity, let Manmohan Singh remain as prime minister for the first half and LK Advani can take over from him in 2011. If the Congress wants Rahul Gandhi as prime minister, LK Advani can take office first and the junior Gandhi can learn the ropes in the interim.

If this alliance happens and endures, it will ensure political stability for many years until the smaller parties come together as a combined entity. Until that happens, our democracy will be the lesser for it. But, maybe, that is a price we can afford to pay for longer term stability and economic development.

Reforms with a vengeance
Every crisis brings big opportunities with it, opportunities to reform and rebuild for the long term. A crisis puts systems through stress-tests and will clearly mark out which are durable and which are not. Policymakers get wide-ranging powers to tackle the crisis. Those who use the power with foresight will be remembered as great men and those who do not will be dumped in the dustbins of history.

A Congress-BJP government may be too much to hope for, but any government that comes to power this year will have a unique opportunity to shape or break the longer term destiny of this country. The men and women who lead that government must seize the moment and usher in wide-ranging reforms in every sector. Not just for businesses, but more for the ailing education and healthcare sectors. And to wipe out absolute poverty within the next decade, for a nation will never be great when the people are hungry.

Slumdog Millionaire wins Oscar
This maybe the oddest wish in the list, but could be as significant as any other. The story of the young boy from a Mumbai slum who is shaped and toughened by the hard life to take on the seemingly impossible challenges will have real life remakes in every part of this country. But, we often forget those stories and fail to get inspired by them. Slumdog Millionaire should be a timely reminder that, irrespective of what has happened, we still can and there is still hope.

Happy New Year!