Will the Congress-led government be able to stop and reverse India’s downhill hurtle?
Sometimes, it seems to me that this is India’s darkest hour. In the aftermath of humungous scams in which politicians and bureaucrats bled the nation leaving it with a dangerously low count of red blood corpuscles, the rupee fell alarmingly, inflation rose frighteningly, economic growth slowed down and inequality in earning between the rich and the poor doubled, albeit in 20 years.
Sensex has been falling, and firms have been laying off employees quietly. Recently Britannia sacked 45 people from its workforce. Citibank is planning to distribute pink slips as well.
After 60-odd years, India is still notorious for its depressing poverty.
And Parliament was recently throttled and stopped from functioning by an opposition (as has been the case in the past), which could have debated and discussed issues rather than indulge in such boycotts. Is this democracy?
During a television debate on Wednesday night, Congress member of parliament Mani Shankar Aiyar and opposition Bharatiya Janata Party (BJP) member of parliament Rajiv Pratap Rudy fought in full public view; allegations became vicious and accusations personal.
The Congress (which heads the ruling coalition in New Delhi) is clearly angry. The party had to go back on its decision to allow foreign direct investment in multi-brand retail in the face of “blackmailing tactics” (as Aiyar put it) by especially the BJP.
It is not yet clear whether FDI has been rolled back or merely given up for the time being. The Congress calls it suspension – in order to forge a broader consensus. The BJP says it is rollback and FDI will not be allowed at all. Curiously, FDI in single brand exists in India.
Midway through the government’s five-year term, multi-brand FDI could have been the first reformist policy in what is seen as a dark period of no-administration and leadership vacuum.
Foreign investors, who have been shunning India for a while now, are clearly distraught over what they feel as “one step forward, two steps back on a major retail reform to appease opposition parties and waspish allies”.
Foreign direct investment in India fell by 31 per cent to $24 billion in 2010.
Reports say foreign investor s have now begun to move away from India and into emerging economies like Thailand, Indonesia and Brazil.
What is even more distressing is that Indian companies themselves have begun to invest abroad, and such flight of capital can spell further doom to an economy that is tottering.
Sadly, Prime Minister Manmohan Singh has either lost the will to steer the country towards a semblance of prosperity or is crippled by a situation where Congress president (and the real power behind the government) Sonia Gandhi is perhaps not inclined to support him. Also the partners in the ruling coalition seem to be out of sync with the Congress.
“The turnaround (in FDI) is the latest sign of weak leadership and lack of direction by India’s Congress Party-led administration, which is beset by corruption scandals, an increasingly ineffective prime minister and rebellious allies,” noted the Los Angeles Times
(In contrast, it was the same Singh who transformed India almost miraculously 20 years ago by doing away with suffocating regulations that held back private investment. India’s GDP had surged by 247 per cent after this. )
Finance Minister Pranab Mukherjee regretted that India’s growth was slowing down (though the basics of the country’s economy were strong), and the rising subsidy bill would widen fiscal deficit. (This sounded like hollow rhetoric.)
The Nomura Asia Pacific Outlook 2012 predicted that fiscal deficit would shoot up to 5.1 per cent. Mukherjee’s target was 4.6. per cent.
The moot point now is, will the government be able to stop and reverse India’s downhill hurtle? The consensus appears to be “no”, since India has never been good at making swift changes.
However, I feel that once the elections to the Uttar Pradesh Assembly are safely out of the way in the first half of 2012, the Congress may be emboldened to adopt radical steps to push the nation out of the horrifying inertia and mess.
A Congress win in Uttar Pradesh, on the other hand, can be almost the elixir of life for the party. Perhaps for India too.
Gautaman Bhaskaran is a Chennai-India based author, columnist and film critic, and can be contacted at [email protected]. He is an FMT columnist.