India is losing global economic game
Gurcharan Das, in his prismatic book from 2009, meditates on ‘the subtle art of dharma’ meaning very many versions of the truth based on one’s perspective and changing circumstance.
In The difficulty of being good, Das holds that the key weakness of capitalism is ‘greed’, while that of socialism is ‘envy’. It is of course difficult to say whether India is capitalist or socialist, but we do exhibit both traits in ample measure.
Being that something other has its own complications. And it can’t be wished away under a veneer of genteelness. The weakness of the indefensible must then be obfuscated using statistical jugglery.
At least this is true if you belong to the UPA. And you won’t let any other version, for example the CAG’s, put you off your propagandist course. Instead you will heap calumny on the CAG, and impute motives, and even see its head as allied with the BJP.
Prime Minister Manmohan Singh recently used a misleading game of averages. He used it as the centrepiece of his reply to the President’s speech. Of course the whole effort was to try and deflect attention from the economic mess his Government finds itself in.
He compared the UPA’s nine years in power to the NDA’s six before triumphantly concluding that despite the current downturn, UPA had managed an average of 7.9 per cent per annum, while the NDA never exceeded 6 per cent.
It can always be counter-argued that the first term of UPA, from 2004 to 2009, in which the GDP rate was higher, was essentially riding on the momentum created by the NDA. There was also the little matter of the near collapse of the Western economies in 2008.
But what could have been an opportunity for India to seize, as China has since 2008 — was frittered away. India deliberately choked off liquidity, resulting in a slowing of business and industry. A slowing that has now matured to a full stop, with no investments being made towards future growth.
No attempt is being made even now to set things right. Most of the media seems to accept this presentation, and a majority of the voting public can’t understand economics anyway.
But conservative observers, both Indian and foreign, have concluded that a Government that expects to cut the fiscal deficit to 4.8 per cent of GDP from the current 5.2 per cent while raising overall budgeted expenditure by 16 to 17 per cent, is unlikely to succeed.
For the moment however, international rating agencies such as Moody, Fitch etc. are giving the Budget a chance to work.
The main thrust may well be, though it wasn’t spelled out, in the reduction of subsidies generally and on petroleum products in particular. But the saved money, certainly hundreds of thousands of crores, will go straight out again, on welfare programmes, while sharply stoking inflation via the transportation sector.
But by the time all this comes to proof, the year will be over, the general elections will have taken place, and it will either be someone else’s problem or the newly triumphant UPA will not have to worry about it anyway.
Truth be told, the country’s finances are in dire straits because we are spending much more than we are earning. And if this keeps up, we will certainly drop out of the reckoning in BRICS and start resembling any of the profligate borrow- and-spend Western economies that are going to be in some form of recession for decades.
This despite all efforts to cheer themselves up by a manic clutching at straws. That is why Dow is rallying ostensibly on some better employment numbers. But it is only a sympathy rally to one that began in China and took in most of the world.
The new leadership in China has announced a spending spree on defence, on infrastructure, and on manufacturing. Since China has massive reserves of money, there will be a knock-on positive effect felt globally. After all, China is called the Number two economy now, given its growth statistics, and not Japan.
But India is sliding off the map meanwhile, fading into the obscurity it subconsciously craves; with its developmental expenditure largely stalled. This, while its Prime Minister stands in the Lok Sabha busy congratulating himself and his Government.
And he didn’t say a word on corruption, though Modi’s ‘deemak’ remark alluded to it plainly. Defending the indefensible with statistics hasn’t quite figured out how to include scams in the averages. But perhaps next time the Prime Minister can run up statistics to say ‘my UPA scams are smaller than NDA ones’ and hope to god that the public believes him in his desperation.
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Gautam Mukherjee is an entrepreneur and former corporate executive.