Some readers may recall watching Kalpana Lajmi’s film Rudaali (1993) on the life of a professional mourner in Rajasthan. When someone died, these female mourners were hired to wail and beat their breast in a display of grief. The breast-beating on television and even in print during the last fortnight, over the imminent demise of the India story, reminded me of the film in which Dimple Kapadia was more eloquent in her silence than all the noise that we have been hearing from mourners of the Indian economy in 2013.
The schizophrenic nature of the economy and the media has seldom come out more clearly. India Today, for example, ran a cover story last week with the ominous lines : Will you be fired next ? The same issue also highlighted the ‘guide to luxurious living’ and ‘how to buy your dream car’.
The wailing was triggered first by the Food Security Bill and thereafter the Land Bill passed by the Parliament. And as the Rupee 'slipped' and the Sensex 'tanked', the wailing became more shrill, the chest-beating more intense. Although the two Bills were supported by virtually all the major political parties, and despite the fact that the two Bills were on the anvil for several years and discussed in Parliamentary Standing Committees for months together, the claws were out immediately and Manmohan Singh and Sonia Gandhi were singled out as the main villains, with P. Chidambaram and Jairam Ramesh following close behind.
“India will be on sale”, predicted R. Jagannathan in Firstpost.com, adding , “Sonia’s Food Bill may provide the tipping point”. Oil companies are humongous loss-makers, if not bankrupt, he wrote somewhere in between and suggested that full price-deregulation or privatisation (probably both) could be the only way out. A gentleman by the name of Ramesh Damani, a Member of the Bombay Stock Exchange, surfaced on Television to suggest that if the elections are announced right away, markets can “bottom out” in 48 hours. Swapan Dasgupta wrote in The Telegraph that the black humour on display (Rupee tying a rakhi on the US Dollar seeking protection and presumably cartoons showing onions being tied in place of rakhis) was the correct reflection of the public mood. To top it all, Tavleen Singh, whose ceaseless potshots on Sonia Gandhi in her Sunday column in The Indian Express are becoming a bit tiring, predictably accused Sonia Gandhi of killing India’s " dream of prosperity” in just ten years. When such pundits join in the wailing, the country must listen.
It is of course not rocket science to see that there is a crisis. International oil prices, which were 45 US Dollars in 2004, had touched 117 US Dollars last month and with President Obama threatening a strike on Syria, they could rise further. With India having to pay in foreign exchange for its ever-growing hunger for Petroleum, which constitutes 32 per cent of our imports as of now, it does not require the Cassandras or Yashwant Sinha to tell us that the situation is grim, possibly as grim as in 1991, when there was much talk of petroleum conservation and when some chief ministers rode bicycles to the state secretariat as a token gesture to motivate others to do likewise. One does not know how many cars Tavleen Singh and Ramesh Damani bought since then, but many Indians obviously did. Again one does not have the figures for households with more than one car, but it is safe to assume that their number is rising.
Petroleum is not used only by cars and two-wheelers, the production of both having nearly trebled since 2004. You need oil to run the wheels of industry and business as well as your warships and for firing rockets. So, neither Sonia nor Manmohan Singh could have done anything to put a cap on the consumption. Or could they ? The government, in hindsight, could still do something to ban or restrict the import of gold, silver, gemstones and jewellery, which constitute 18 per cent of our total import. If they do, the pressure on the Rupee could ease considerably.
The Rupee’s value has fallen because our exports have fallen. There is less demand for the Rupee in the international market whereas our demand for the US Dollar is growing in proportion to our growing imports. One of the main reasons for the fall in exports is the sharp decline in the export of iron ore from 120 million tonnes to just about 20 million tonnes following the Supreme Court banning the mining of the ore in Karnataka and Goa, the two BJP ruled states where it was the responsibility of the state governments to ensure steps against illegal mining and take care of environmental concerns.
Commentators have also lost sight of the fact that the increasing demand for Dollars is partially due to overseas investment made by Indian companies. When the Tatas buy Corus or Rolls Royce or when Infosys buys up a company in the US and Coal India goes hunting for a mine in Australia, they need Dollars. Even high value individuals from India have been purchasing real estate abroad and the middle class have been travelling overseas a lot more frequently. So, in a way all of us contributed to the Dollar buying spree.
On the flip side, foreign investors have stayed away. Had they come, the demand for Indian Rupees would have grown. But why should they invest in a place where the insiders are running it down ? It is not as if the UK, the US or Australia or Japan do not have problems with financial corruption. But in none of those countries do we find the kind of hysteria, rhetoric and doomsday prophecies that we find here. There are also problems related to infrastructure, land acquisition, litigation, the judiciary and, yes, the government. But rather than address them purposefully, our response has been disproportionate and utterly negative.
Another reason why our exports are so shaky is because we are so weak in manufacturing that we have to import mobile handsets, Flat TV screens, computer hardware, trucks for the army and even engineering goods. Our cars still cannot do with entirely indigenous components and need to import them. So, the failure is also that of Indian industries: Why did they fail to add to India’s manufacturing muscle all these years before the two contentious Bills passed by the Lok Sabha, which, according to the wailers, have put paid to all hope of prosperity?
Some commentators have indeed pointed out that a supposedly weak Rupee is an opportunity to increase our exports. But their voice has been drowned in the TV-led lament. There are no doubt vested interests and import lobbies which do not want India’s exports to grow in various sectors. That is the scandal that waits to be unravelled by our normally vibrant but often ill-informed media and commentators.
Since 2004, when the country’s capacity to generate electricity was 1.12 lakh MW, the country has added a capacity to generate an additional one lakh MW (the capacity stood at 2,11, 766 MW this year). During these eight years, Coal India’s mining of coal increased from 309 million tonnes to 557 million tonnes. And yet there is not enough coal to generate electricity and we are forced to import coal. The government had clearly sensed the need for even more coal and had taken a policy decision to open coal mining to the private sector. But that entire plan has gone haywire with the private players developing cold feet after the global meltdown and their greed getting the better of them. A lot more will no doubt be heard about ‘coalgate’ but it is ridiculous to blame the Prime Minister for it.
If the critics had cared to look up the statistics, not just from the government but also from manufacturers, producers and trade bodies, they would have found that during the period between 2004 and 2012, production of foodgrains, fertilizer, milk, eggs, meat, cement etc., not to mention tractors and cars, has gone up significantly. But it is the Rupee and the Sensex, which have hijacked the narrative. While the fall of the Rupee has been sought to be equated with the collapse of the economy, the fluctuations of the Sensex (with just about one and a half per cent of our population investing in the capital market) has been invested with a hysteria, which would have been amusing but for the circumstances.
There are lessons from the United States. During the last four years, economists from both the Left and the Right slammed the US administration for not doing enough or for tilting too far to the Left. The administrator, however, does not have the luxury to wait for the debate to be resolved and went ahead to do what had to be done. And the critics have been silenced to a great degree as the US economy shows signs of recovery. When one looks at the statistics, one does get the feeling that there is a lot going for India and that it is not fair to write off the India story, not by a long chalk.
And now, the rupee has gained 428 paise in the last 2 days? Are all the Rudaalis going to change tune? All the so called economists and commentators on these outlook boards had confidently predicted the Rupee would go to 70. Are they also going to change tune now. Reminds me of a story I heard about how finance firms come up with these prognostications. The chain starts at the bottom, with a newly recruited kid who would much rather be swimming in hooker pussy putting random numbers into an excel sheet. He would get a number and then scrap it because that's not what the boss wants to see. He would then shove two fingers in his ass and pull out a number. Then his boss would come and reprimand him and tell him that he should at least put his whole fist in his ass. Subsequently, the two of them would go to their boss who would call them useless buffoons and shove his arm upto his elbow into his ass and come out with a new number. Finally, they would go to the head of the company who would throw all their numbers out and go and announce a number all by himself. And he wouldn't need to put his arm anywhere because he happens to be a gigantic asshole himself. Whores like Ruchir Sharma are available to spout whatever nonsense one desires to hear on TV
>> not get down to specifics, tangibles, actionable...
You have beaten this to death! The NYT article is about what it says it is about, not about what you want it to be!
Anwaar ... classic .... we can stay with "hope", "belief", "faith" and not get down to specifics, tangibles, actionables for real change on the ground.
The title itself speaks of "Hope" and adds, "some prominent Indian economists believe the recent slowdown may actually be a good thing for the country." A silver lining is defined as, "A hopeful or comforting prospect in the midst of difficulty."
Anwaar .... "Just what is reported in the NYT article that I had posted."
I went and re-read it, I must be missing something. What is the specific "silver lining(s)" in it? Help me by pointing them out. Could be I am just dense or don't want to see!!!
In fact for us living in Desh, this is the daily existential choice and faustian bargains we keep making and there are no signs of change in that .... "Despite the hardship, he is passionately against corruption. This year, he paid a bribe to get his 4-year-old son into a good school, an indignity that outraged him. “I know I benefited from corruption, but I’m still against it, and everyone else in India is, too,” he said.".
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