It took an astronomical increase in the price of oil to expose the weaknesses in multiple markets across the world.  Inflation is the new demon.  Developed economies know that the cycle will turn. There is a difference in response, in countries like them that have cyclical economies, and in countries like us that are still structurally evolving.

Inflation in our case is not a 'purely monetary phenomenon.' Dr Y V Reddy may not have all the answers. We have complicated matters for ourselves in several ways.

The much-required reform in the agro sector did not happen at all.  We have not dealt with seed or soil quality, irrigation, productivity, finance, labour and marketing issues that plague agriculture.

Barring pockets of enterprise where farmers work with corporate buyers, there is little change. Instead of the needed reforms, we have ill thought-out employment schemes, outdated irrigation projects and a fertiliser subsidy system that has killed incentives to producers, leading to shortages.

International food prices will correct naturally, but our short-sightedness on agricultural reforms will still hurt us.  The noise about inflation and the quick fixes have ensured that political parties will never risk their vote banks to address the real problem.

The oil story is no different.  Adjustments to demand will happen the world over, easing prices sooner or later.  In our case, we like to subsidise. As we have dragged our feet on oil subsidies, we may have sealed the political will to demand efficient usage and thrift from the voting public.

As subsidies increase deficits, we may choose to kill growth with higher interest rates. We cannot predict whether industry will be able to bear the brunt of lower margins, and higher interest costs, because we have not enabled capital and labour reforms. Resilience to downturns needs to be built when the going is good, and not after the cycle turns.

That could be the single most important failure of this government.  There is still so much going for us - our entrepreneurs, our young population and our optimistic middle class.  These strengths have not been built upon.

Surging tax revenues have been used to fund populist schemes without correcting threats to fiscal balance.  There is so little to show for social infrastructure in health and education.

There is so much uncertainty about how physical infrastructure - roads, rail, power - will get built.  We are left facing the possibility of a much higher deficit; shortages in oil, food, fertiliser and essentials; inadequate reforms for private participation in nation building; and uncertainty about labour, capital and educational reform.

The real damage, therefore, is in the signals this has sent to the political parties, now readying for the next elections. Irrespective of who grabs power, economic rationale is unlikely to overtake populism.

When the Congress faced its first post-reform election in 1996, we would all talk about how the reforms process was not reversible regardless of who came to power. We seem to have come a full circle.  We now stand at a point where, irrespective of which party came to power, there is likely to be little possibility of reform.

When I began this column five years ago, in April 2003, the structurally different story of India played out into a bull market that turned out to be much stronger expected. As I write my last column, the structurally different story of India seems weaker than most had expected.

We will all surely look back at today, when the next bull market arrives, and fantasise about the gains we could have made, if only we had the courage to invest.  As they say, even as things change, they remain so much the same.

The author is managing director, Center for Investment Education and Learning