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WHY EXCELLENT ECONOMICS IS EXCELLENT POLITICS!

By Sanjay Jha

There is a sense of déjà vu in the air, reminiscent of the brouhaha that encapsulated the 2009 parliamentary crisis on the nuclear deal. Once again a resolute Prime Minister ( Manmohan Singh) , determined to surmount profusely exasperating, self-serving political parties takes the cantankerous bunch head-on; he directly addresses the nation. Suddenly the noise-makers are stunned into an impenetrable silence. Almost overnight, a much battered, bruised UPA-2 senses a mood shift, and a country plagued by mindless abuse of its democratic institutions gives a collective hurrah. The tide has turned dramatically, and a worried opposition goes into reverse gear to condemn common-sense, committing hara-kiri on auto-pilot. Come September it truly has been!

I have always believed that whenever the BJP and the Left are protesting together, the UPA is on the right track. Schadenfreude had overtaken BJP’s sensibilities, but the Prime Minister’s unflagging determination to pursue economic reforms has taken the wind out of the sails of the beleaguered Sangh Parivaar’s multiple avatars. It is now resorting to cheap tricks with their intellectually half-baked candidate for PM Narendra Modi rubbishing everything United Sates. It sounds trite, kindergarten stuff. Politics has suddenly nose-dived to guttural levels. We could do with some stimulating resuscitation of a mature debate.


The BJP has indulged in “ corruption arbitrage” ; hidden their own humongous corruption deals in Coal-allocations and practically all their states ( Gujarat, Chhatisgarh, MP, Karnataka) under serious CAG cloud; instead it oversold CAG’s preposterous, astronomical sums of 2G and CoalGate losses ( over Rs 3,50,000 crores “corporate subsidy” apparently) as propounded by over-zealous CAG auditors evidently ill-equipped with elementary valuation methodologies. A lazy, and in some cases a compliant media doing little research to demystify the sheer stupidity of those numbers helped the BJP effortlessly spread its malicious propaganda. CAG’s Vinod Rai was made to look like an outlier, a game-changer, but Rai obviously had some ulterior motives ( why and who leaked those famous reports, Sir???). The Sangh Parivaar are past-masters in the twin art of theatrics and atmospherics, but their cacophonous TV studios show got a much-awaited prompt burial as the Supreme Court verdict last week confirmed the government’s stand and apprehensions on pricing of natural resources. By Thursday evening, CAG’s attempt to be the modern Aryabhatta by adding silly zeroes was impertinently punctured. Mr Vinod Rai and team , frankly, needs a crash course in basic accounting. Those figures of Rs 175,000 crores and Rs 1,80,000 crores are a nasty joke in our political discourse, it is about time they are hurriedly consigned to the dustbin.

BJP’s sudden xenophobia for anything American ( FDI in multi-brand retail) is a calculated ruse; at any cost disrupt structural far-reaching reforms that will alleviate economic woes, thus aggravating UPA’s stature. The party bereft of any coherent strategy for a modern India, is hoping desperately to ride on craftily manufactured anti-Congressism, fully aware that the Congress has several political rivals , being a mainstream pan-India party , some of whom are its uncomfortable allies in the UPA coalition. Thus, BJP benefits from Congress’s fair-weather friends. Its brazen stymieing of Indian Parliament was nothing short of anti-national, but it escaped grave censure because of collective inertia of all anti-Congress parties.

Some political parties suffer from acute dyslexia ; it is pertinent to understand that foreign capital is not for free. Wal-Mart is not a Bill and Melinda Gates charitable foundation, it has to create shareholder value. Thus, for India it is smart strategy to build reasonable safeguards ( back-end infra, sourcing from local SMEs, upfront initial investment ) as it has done, but we live in a fool’s paradise if we believe that we remain a perennial haven for foreign investors. Like grumpy teenagers, even transnational companies have mood swings based on a country’s perception. Globalization , ladies and gentlemen, also has its downsides ( we seem to believe it is a perpetual rosy honeymoon).The Euro-zone seems headed for an official recession, and US growth rates have stagnated at 1.2%, not exuding enough exuberance. Thus, India needs a judicious mix of FDI funds and domestic investment to spur growth; but BJP /TMC etc are eyeing 2014, India be damned. India is witnessing extraordinary political immaturity , but it is also the responsibility of the Congress party to regain its national dominance , as regional parties with their limited interests can seriously jeopardize crucial national priorities. Actually, the Congress needs to get increasingly ambitious for 2014 on the logical plank of single-party parliamentary majority; there is still a good 18 months to go. And the people are visibly frustrated by the scheming and the stone-walling.

The debate on FDI has reached asinine levels; in reality it will enhance agricultural productivity, eliminate middle-men’s shady margins, reduce astronomical wastage of perishable vegetables, food-grains and fruits, improve packaging, increase employment in organized sectors such as logistics and front-end sales and customer service. The threat to kirana stores is such an exaggerated fear psychosis ; on the contrary, given stringent entry conditions and high real-estate costs , a Tesco or Metro might seek alliance partnerships with them. Clearly, BJP is only worried about its “ trader constituency”. These are the perils of democracy; China is thriving under 100% FDI in multi-brand retail ( what BJP had itself recommended in 2002) . The fact is the largest beneficiary states of FDI in multi-brand retail would be primarily agrarian ones such as Bengal, Bihar , Orissa and Uttar Pradesh; ironically enough, they are all mischievously protesting because the common man does not know the fine print; that’s the brutal reality of Indian politics. Their elected representatives are taking them for a massive ride. Have the big daddies of Indian retail really usurped the prime penetration and personalized relationships of the kirana stores??? Utter rubbish!! And haven’t Pespi and Coca Cola made significant investments in rural contract farming to sell their urban chic cola drinks?? In West Bengal, in Mamata Banerjee’s state Pepsi’s contract farming has benefited farmers by increasing earnings ( by upto Rs 40,000 an acre) , besides enhancing potato production by a whopping 100% and other farmer assistance programs. ITC, McDonald’s, Unilever etc have all actively worked on contract farming initiatives and so far have been extremely successful. Coca Cola procures mango pulp in big bulk too. And so far the conventional grouse of ecological footprint, soil degradation or environmental devastation has not yet been reported. Sure, one acknowledges that abrupt commercialization of agriculture does pose certain occupational and societal /livelihood adjustments but in the long-run if effectively harnessed it increases productivity and household income.

India needs to do a fine balancing act; expand GDP growth as well as its redistribution; targeted policies towards select income classes may be the new norm that needs judicious experimentation. For instance, higher excise duties on diesel cars, zero subsidies on LPG cylinders on those earning more than Rs 12 lakhs per annum, a luxury tax on the super-rich, special tax concessions to SME companies and higher expenditure tax on conspicuous consumption. India’s biggest challenges are sharp income inequalities and a largely unemployed “ demographic dividend”, both could result in dangerous social tensions. A mere 10% of Indians hold 55% of India’s wealth .The myopic elitists who keep propagating reduction in subsidies display their self-centeredness; can India ignore BPL families and hope to be a great economic superpower ? Aren’t the underprivileged class deserving of better education, health and basic food security, besides infrastructure ? The truth is that MNREGA has become rural India’s game-changer social security net despite sporadic cases of high corruption in some states.

I believe that intrinsic greed for power has made political parties like the BJP,TMC etc commit a deadly political miscalculation. India’s public cannot be easily duped by manipulated misinformation or self-righteous balderdash; they will ask tough questions come election time. Secondly, India’s Young are self-confident, ambitious, have an aspirational context and unbridled dreams; they have no existential crisis. They are not constrained by the congenital inferiority complex of their forefathers, struggling in a complex, socialist hangover of a post-Independent India grappling with teething infancy issues . Fear, paranoia and claustrophobia have early expiry dates; historically these are short-term political tactics, they usually boomerang.

It is a sign of the times that FDI in multi-brand retail, an economic agenda with a commercial complexion is India’s political “ moment of truth” . The writing is on the wall. And the billboards.

1 Comment on WHY EXCELLENT ECONOMICS IS EXCELLENT POLITICS!

  1. swapan ranjan guha // October 1, 2012 at 7:14 am // Reply

    Sanjay jha as usual so well defined,i am afraid people like modi has only one point agenda,oppose whatever congress say’s or dose,so what if it is good fr the country.

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