Do we want economic growth at all?
We can stay in denial about the world’s top three rating agencies raising alarms about the Indian economy in less than two weeks and call it a “herd mentality”. Gautam Chikermane writes.columns Updated: Jun 19, 2012 15:59 IST
We can stay in denial about the world’s top three rating agencies raising alarms about the Indian economy in less than two weeks and call it a “herd mentality”. We can say interest rate cuts will do nothing to inflation and continue to keep India a high-financial-cost economy. We can say prices will come under control “shortly”, when they have been heading only northwards for the past three years. We can say that our domestic market, three-fifths of our GDP, is enough to keep us going. We can shun foreign capital with retrospective tax amendments.
We can blame everyone else — from high oil prices that have been falling of late and high global commodity and food prices to restrictions of a limited political mandate and fragments within the governing coalition — for the fall from grace that has seen the world's economic darling slip towards an also-ran, recently losing the status of the world’s second fastest-growing major economy to Phillipines. We've come to a point where hallowed ideas like logic have no place in the economic discourse.
But there is one question that the politics of India can no longer sweep under the carpet, an issue that must be addressed today — not next month, next year or next elections but today: do we, as a nation, as the world's largest democracy, as a people seeking middle-income per capita income status, a region that the world is looking at to deliver global opportunities, really value or even want economic growth?
From signals coming out of our elected representatives, the answer is: must we really suffer it? The architect of economic reforms, the Congress -— prime driver of the governing UPA alliance — is focussed on welfare without growing the accompanying treasury to support it. The result: a high fiscal deficit leading to high prices and high interest rates in a never-ending vicious cycle leading towards stagflation, a situation when prices are growing but the economy isn’t. A few more such apologetic quarters and we're looking at unemployment that will brutally end the economic dreams of a youngest-ever India.
Its noisiest partner, the Mamata Banerjee-led Trinamool Congress has moved so far left that even the Left parties would cringe. The BJP that had brought a new vigour to the virtues of economic growth is too busy playing petty-politics --- opposing FDI in retail, for instance. Other smaller parties have other smaller agendas, none of which are anywhere close to offering the key deliverable of growth today.
I find it astonishing that so much mind-space is being used to counter something that's so obviously profitable economically as well as politically. Invest in infrastructure and ride the multiplier; open employment-intensive sectors and see jobs soar; welcome global capital where domestic risk isn't able to or willing to go; or if you don't like the colour of money, open the defence sector to private Indian capital and see capacity-building take place in a sector that's simultaneously the most strategic as well as one that creates high-tech jobs.
But let’s leave those surface-level negotiations to those best suited for the job — politicians. My question is one step deeper. When we vote for an individual, what are we voting? Surely the person is incidental to the larger scheme of things, as she ends up following the Chief Whip’s orders, leaving little no scope for discussion, leave alone dissent, as a young MP from Rajasthan told me. The party itself is at the mercy of other smaller groupings that have the power to wag the dog, so even voting a party becomes an exercise in futility.
From a distance, it seems as if India as a country is voting for welfare and against the component that can finance those freebies. By smothering economic growth as if it were a dengue-carrying mosquito, we are equally guilty of bringing into power a political governance structure that cares little for individual aspirations of an India that has changed permanently. This is not to suggest that we need younger leaders to lead a young India — the shameful dynastic stranglehold over young MPs is evidence that while generations may change, ideas may not.
Finally, why are our economic reformers shy about the virtues of economic growth? Why is the Congress that has created the edifice on which young people are willing to experiment and express their individualities, not being able to sell that success to itself, its allies and the Opposition? Why is the BJP, whose siren song ‘India Shining’ captured the hearts and minds of the young, losing the growth plot along with the two elections it lost in 2004 and 2009? What is so embarrassing about offering the opportunity for a better economic life to 850 million who live on less than $2 a day? How long can the government keep printing money and expanding its fiscal deficit and through it inflation — a tragic tax on the poor — without the accompanying economic activity that strengthens the country from within, state by state, company by company, man by man?
As we reject economic growth today, we need to remember that we are consciously giving up on a dream that was born 20 years ago. We are choosing to return to the coercive times of the 1970s, when wealth was a four-letter word, dynamism was something you smothered, and economic growth wasn’t part of the national conversation. Fix it now and we move up to per capita levels of Brazil and China; reject it and we stay with Sudan and Pakistan.