Profit motive: why markets love Modi
India Inc requires a ‘messiah’, a ‘strong leader’ to continue doling out such concessions and ‘sweetheart’ deals. Thus, sections of them self-appoint themselves as the ‘cheerleaders’ of the BJP PM aspirant. Writes Sitaram Yechury.columns Updated: Mar 11, 2014 09:10 IST
‘Shining India’ is literally basking in the sunshine. The Sensex is scaling new heights, almost breaching the 22,000 mark. The Nifty has also created a new record. India Inc, through the spokesman of a leading finance company, promptly responded, saying, “The possibility of a Narendra Modi-led NDA government coming to power after the Lok Sabha elections is fuelling the rally” (Hindustan Times, March 8).
In its quest for unbridled profit maximisation, India Inc perennially opts for a ‘fast food’ approach to explain stock market fluctuations. This has often happened in the past. The tumble in 1998 was attributed to the delay in J Jayalalithaa sending her letter of support to a waiting Atal Bihari Vajpayee to be sworn in as the prime minister. This was the time when the East Asian economies collapsed.
The consequent international financial turmoil that followed was best described as a situation where ‘scavengers were mopping up the bones of what were once considered Asian tigers’.
Again, international financial turbulence was ignored and the Left parties which had extended outside support to the UPA 1 in 2004 were blamed. Likewise today, ignored is the fact that international markets are in a state of greater flux. Wall Street reached record levels following a strong US payrolls report. A large number of jobs were added during the last two months notwithstanding a growing unemployment rate. This has impacted on the larger Foreign Institutional Investor (FII) flows into India.
However, this euphoria is not lasting as negative news pours in from the European and the Asian markets over the Ukraine crisis and the discouraging data comes in from China. Its impact will soon be felt by the Indian markets. Further, the stock markets also respond to domestic economic fundamentals, which are showing a relative turnaround after 18 months with the rupee strengthening against the dollar and the current account deficit situation improving, thanks to much delayed luxury import curbs.
Stock market fluctuations, though too marginal to impact on the livelihood conditions of the vast majority of our people, are, however, important as levels of market capitalisation determine the corporates’ capacities to access the financial markets.
Thus, crucial to India Inc’s profit maximisation drive is to continue to keep high such contrived market buoyancy. This, in turn, is determined by their capacity to manipulate the State by exponentially increasing the levels of ‘crony capitalism’. This column had occasion to discuss this scourge earlier and note that the prime minister also had to once concede in Parliament that “India can ill-afford crony capitalism”.
Yet, the UPA 2 all along promoted it. This is corroborated by an MD of a leading investment bank, who said, “Throughout the recent slowdown, there has not been a single year of decline in overall (corporate) earnings”. India’s largest private sector company, Reliance Industries, zoomed 5.72%, while the largest Telco, Bharti Airtel, soared 5.5% and the largest private bank, ICICI, gained 6%. All this would not have been possible but for the massive concessions that the government provides to India Inc.
India Inc requires a ‘messiah’, a ‘strong leader’ to continue doling out such concessions and ‘sweetheart’ deals. Thus, sections of them self-appoint themselves as the ‘cheerleaders’ of the BJP PM aspirant. Gujarat has an unprecedented record of concessions given to corporates. Reports based on Right To Information inquiries reveal a string of such concessions (Hardnews, July 20, 2012).
L&T was allegedly allotted 8,00,000 sq m of prime land in the industrial zone of Hazira, Surat, without auction at the rate of Rs 1 per sq m while the price fixed by the land committee was Rs 950 per sq m. Land for Tata’s Nano car project, 1,100 acre, was allegedly sold at Rs 900 per sq m while its market rate was around `10,000 per sq m. The total amount of concessions given to the Tatas has been estimated to cost the state government exchequer more than Rs 60,000 for every car produced! Likewise are the alleged details regarding the Essar and the Adani corporate groups.
This is the so-called ‘vibrant Gujarat’, which has the highest poverty rate in the country, according to the Planning Commission’s Tendulkar Committee. Close to 400,000 farmers do not have electricity connections. Reportedly 9,829 workers, 5,447 farmers and 919 labourers have committed suicide under the current CM. The state debt has steadily increased every financial year from 2008 standing at Rs 1,12,462 crore in 2011. Are corporate India’s expectations of more ‘sweet heart’ deals not justified? Of course, particularly when they come at the expense of compounding misery on the working people as evidenced by the state’s low and further declining Human Development Indices.
Recollect Steven Spielberg’s hallmark film Schindler’s List. While the businessman protagonist leveraged his support to the fascist regime to prepare a list of Jews and save them from Hitler’s horrendous concentration camps and certain death, he justifies his support saying, “war is the best time for business”. Notwithstanding occasional humanitarian expressions like this, at the altar of profit maximisation, literally everything else can be sacrificed including human life, liberty and dignity.
The success of India Inc’s euphoria, if it happens at all, comes with a venal cocktail of communal mayhem and crony capitalism-promoted mega corruption. The frightening consequences of the curtailment of human rights, civil liberties and social harmony will be disastrous for the rich mosaic of diversity that constitutes our India. Worse, this will be accompanied by a further damning decline in the quality of life of the vast majority of our people.
What India needs is an alternative policy trajectory where economic growth will take place accompanied by the growing economic prosperity of all our people not merely for the minuscule ‘Shining’ India. Such an alternative is not merely possible but is also eminently feasible.
Sitaram Yechury is CPI(M) Politburo member and Rajya Sabha MP
The views expressed by the author are personal