The Finance Minister spent the afternoon of Independence Day watching shuttlecocks rising to the air and come crashing to the ground. I am sure he enjoyed himself, as we all did, witnessing the advent of badminton as a spectator sport. The question is, did he detect the eerie similarities between the game he was watching and the Indian economy whose volatility resembled the journey of the shuttlecockIJ
The analogy is hardly far-fetched. On the morning of August 15, Prime Minister Manmohan Singh celebrated his tenth speech from the Red Fort by proclaiming his pride in India’s achievements over the past decade. It was a boast that may have got lost amid the contrived indignation over the cheek of a mere Chief Minister to shift the gaze from Mughal grandeur to a humble school in Kutch. But the markets reacted the next day by battering the Indian Rupee to a new low against the Dollar and hammering the stock market index down by nearly 2.5 per cent-both suggesting a crisis of investor confidence in the state of the Indian economy.
Indeed, the joyous occasion of India’s 67th Independence Day was marked by an unending series of grumbles: Grumbles over unaffordable vegetables, grumbles over soaring electricity bills, grumbles over the rising EMI of home loans and grumbles over the fact that job opportunities have shrunk alarmingly. In fact, it is more than grumbling, there is widespread fear and alarm over what the future holds for ordinary Indians. And this is a fear shared by both the proverbial aam aadmi and the corporates. True, the Finance Minister has made a series of announcements over the past few days aimed at controlling the fires that are raging throughout the country. But the only people who appear to have cheered these new regulations are the gold smugglers and the hawala traders who now believe that they are back in business. India, it would seem, is regressing to the bad old days of the 1970s when the only viable alternative to the gloom and doom was a one-way ticket to another country. The alarming extent to which India has squandered its achievements should be a matter of collective shame. Instead, if you turn on the TV or turn the pages of newspapers, you are likely to be confronted with images of smiling people in colourful ethnic dress celebrating the success of Bharat Nirman. You are likely to see a kindly Ashok Gehlot patting a child on the head and watching her scrawl Happy Independence Day on a slate.
The first thing professional communicators tell you is that the claims of a product must correspond to facets of actual reality. The advertisements tell us of a Golden India whereas the reality is collective despondency. The spin doctors of the Government should seriously ask whether the quantum of money that is being expended on giving the UPA-2 a pre-election boost is actually proving counter-productiveIJ But why worry about responsible spending when it is the money of ordinary people that is involvedIJ In other countries which are faced with a dizzying national debt, the endeavour is to regulate Government spending, cut wastage and improve efficiencies. In pre-election India, the Government has gone on a spending spree without any concern for how the money is being spent and whether the country can afford it. Underlying this profligacy is the belief that an election victory can actually be bought by emptying the treasury. The media can be placated by subsidies in the form of advertisements; the anger of students can be tempered by doling out free computers; and the poor can be placated by waving a piece of legislation that may or may not accord them food security but is calculated to make life impossible for whoever assumes the reins of power in Delhi after the general election.
In military strategy there is an approach called scorched earth which involves a retreating army laying waste the ground it is vacating. Today’s UPA Government is engaged in a variant of the scorched earth approach. Maybe there is a quiet realisation that India will have to go to the International Monetary Fund for a loan that will inevitably come with stern conditionalities, including a cut in Government spending and even an all-round rise in taxes.
There is one problem though. The IMF, it is clear, will not extend a loan to a lame-duck Government. It will only negotiate with a Government that has the stability to carry out the undertakings. This is why there is concern in Washington over the timing of the general election. If the election is held as per schedule in April-May 2014 and a new Government takes office in the last weeks of May, the macro-economic plight of India will have worsened considerably. But the decision-makers in the Congress realise that the party is still not prepared for a snap poll. They believe that more time is needed, not least because they believe that the long interregnum between now and April 2014 will see Narendra Modi burn himself out.
The calculations are all premised on assumptions and a bit of wishful thinking. But that isn’t the point. For India the real concern is that a Government that has run out of ideas and political determination will leave a nightmare legacy that will affect the well-being of all but those who have been the beneficiaries of the most venal form of crony capitalism and irresponsible populism. Manmohan Singh’s speech from the Red Fort was overshadowed by the pretender from Gujarat not merely because the PM’s delivery is insipid but because he has lost the ability to give India any hope for the future. (END)