By Sanjay Jha
( We Indians are in a perpetual state of outbreak these days ; moderation has deserted us completely. It happens sometimes in a lifetime in the cycle of growth , when a country smells that big opportunity it has long waited for , but is not fully prepared for it when it comes knocking at the door. A churn follows. Everything is challenged. Chaos reigns. Expectations soar. But it is important that in this period of trial and turbulence, cynicism must never overtake good common-sense).
By a peculiar coincidence, S&P rating outlook downgrade on India took place amidst a hostage crisis in Odisha . Left to Ruchir Sharma’s ( author of just launched Breakout Nations) rather impractical hypothesis ( don’t distribute the increasing pie till it gets bigger) India would be run over by Maoist armies, and truly become a banana republic. Please don’t run for office, Mr Sharma!
Rating agencies world-wide fancy their role as bellwethers of bad news. A rational explanation of India is incomplete without annotating about its innumerable contradictions/ challenges, yet most take a simplified linear input-output model, devoid of microscopic research, or mature understanding of its ground-level issues. That’s why investment bankers are usually wrong. Even those from Morgan Stanley that Mr Sharma belongs to. That’s why Occupy Wall Street has millions of silent supporters in modest lower middle-class homes across US seething with controlled rage.
Once upon a time in India, marketing it was about marathon discussions on just one aspect; Risk Factors. Political uncertainty was mostly the damning factor. No amount of Powerpoint sandbagging could salvage those susceptible weak-spots. There was no question of hubris, just hands-folded humility. Things have changed. A slowdown is an ecumenical reality, in a globally networked economy, the vulnerabilities to uncontrollable externalities rise. The Butterfly effect is for real. To pretend otherwise is akin to committing hara-kiri. S&P seemed to overlook that largely. There is no decoupling possible, we will be exponentially impacted by a slow US recovery and the continuing uncertainty over the Euro Zone. We cannot glorify globalization one day, and stay insulated from its infected , nagging sinus the next. The risks on global oil prices thanks to the Iranian crisis looms large.
The new Midnight’s Children of India were born in 1991 when then Finance Minister Manmohan Singh took the intrepid step of removing license/quota systems and introduced partial current account convertibility. Nowadays real estate global majors sell luxury beach-side homes in exotic locations to the new-wealthy in Bharat. If along with China, India is the world’s largest consumer-labor market , domestic corporates sitting on piles of cash should be in a state of frenzied buoyancy, right?? Didn’t India just overtake Japan to become the third largest economy of the world on purchasing power parity principle? Equity and redistribution will be India’s biggest challenges going forward; because the growing pie is being disproportionately cornered by a small minority, and is getting increasingly skewed. Social tensions rise; Mr Sharma, Maoists are also Indians, in case you forgot.
2011 was a strange year, gloomy and depressing. Why, for heaven’s sake?? The virulent vehemence of Team Anna against the Indian parliament, politicians and even the Prime Minister grievously atrophied our national stature. Sadly it happened after two events that had raised India’s global profile; US President Barack Obama’s emphatic endorsement of India as global economic and political power during his visit , and India’s commanding triumph at the cricket World Cup that had momentarily given Young India a huge psychological boost and self-confidence. But soon a bizarre whirlwind swept India , using anti-corruption as a smart tactical ruse ( which would guarantee at least initial public sympathy and approbation ) some vested interests made an utter mockery of India to suit their own narrow political game-plans. India received horrendous publicity, even as political opportunism reached epic proportions. This is not to deny that we need to halt the gravy train super-fast express, but we derailed India significantly in the process. We forgot that we were the toast of the global investor community where perception matters. A quasi-tentativeness in decision making was inevitable given the monumental distracting pressures for the government. As a country, we let each other down. A year later, Team Anna is in abject shambles, a pygmy, a parody of its earlier avatar as it canoodles and cozies up to dubious characters like Ramdev Baba. . But India has already paid a price for its incessant self-abuse.
At core, we are a country in transition undergoing dynamic economic, social and political turbulence on account of multiple objectives, sometimes intrinsically conflicting ( guns versus butter, allocation of scarce funds, state-central federalism disputes). Given our checkered bumpy past, there is trenchant criticism for past misdemeanors. At times we appear unforgiving, intolerant, and I dare say, impractical. Every democratic institutional pillar is experiencing internal convulsions, even as India does a tightrope balancing act. Actually, there has never been a better time than now to see India’s great tryst with destiny happen; but we need to rise above the cacophonous Cassandra’s and doomsday prognosticators. I know it won’t be easy, but this boundless energy needs positive outlets. Protest we can and we should, but it can’t be a hollow motivated act for self-gain.
The truth is that coalition politics hurts, even if we choose to live in a fool’s paradise. But then that is our new modern political reality. It is the proverbial elephant in the room. A restless and desperate opposition is of course doing grave damage by extrapolating non-issues and tilting at the windmills, selling cynicism with great flourish. To discredit each other through the latest import, Chinese whispers, seems to be our forte. Negativism is our burgeoning industry. It is this “ sentiment” , an intangible that is beginning to boomerang on us.
The retrospective tax issue on account of the Vodafone SC case is apparently caused acute discomfiture overseas. Without trying to argue out that case, it is pertinent to note that the GOI has the necessary discretionary powers to amend laws to ensure tax avoidance. Remember, in a booming economy like India there will be many cases of mergers, demergers and acquisitions in the future. And the amount is not small change at Rs 11,200 crores! Critical issues like FDI in retail , food security, NCTC, land acquisition, mines and minerals law, GST etc await that elusive political consensus. Policy paralysis? People are watching you too, coalition partners and opposition parties! Remember the Indo-US nuclear deal ? The BJP got routed and the Left got left behind.
The conduct of the corporate sector in India over the telecom deal was shambolic, shameful and sleazy, so just cut out the sanctimonious crap, gentlemen! It is time for you to increase your genuine CSR activities ( without backward linkages to your own business needs), demonstrate better corporate governance and clean your own stinking backyards. And maybe tone down that seedy-sordid lobbying too.
I am an incorrigible optimist, an incurable dreamer of a great India. We are rancorous, rambunctious and full of rowdy story-tellers .But amidst that, we are a Renaissance nation, in a continuous state of outbreak but headed northwards. What India needs is inspired leadership in every sphere of society’s institutions, ruthless obliteration of red tape ( which fosters corruption) and inclusive expansion. For us, it is a hard grind for another five years. But then , we will arrive. We ought to.
I haven’t read Ruchir Sharma’s book but am hoping it will be more than the usual rodomontade of pin-striped merchant bankers on a hallucination drug providing free panacea and prescriptions. And thus more than a Morgan Stanley Ka Dabba!
Sanjay Jha can be followed on Twitter@JhaSanjay