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Christine Lagarde and trickle-down theories in London

Indian ministers visiting London have always faced questions about why India moves so slowly in opening up its markets. Dipankar De Sarkar writes.

india Updated: Jul 27, 2012 23:52 IST
Dipankar De Sarkar

Indian ministers visiting London have always faced questions about why India moves so slowly in opening up its markets. The impatience of bankers and others in the world of finance is understandable, given the expectations raised by the first wave of market reforms.

Kamal Nath was good at ‘giving it back’. In the run-up to the failed bid to agree on global trading rules, he became a celebrity among developing countries after describing taxpayer-subsidised European cows as too fat for their own good.

But he was criticised in Western capitals for his negotiating style, described as obstructionist. Now Anand Sharma finds himself in the hot seat.

A world away from Nath in his style of functioning, Sharma comes across as a more serious man, diplomatic and measured in his responses. But is his patience wearing thin? After one more question from a journalist at a gala dinner this week, he was prompted to correct what he called “the perception that India has stopped thinking.”

“Of all the calendar years since 1996, when the FDI policy was introduced, 2011 was the year when India received the highest FDI of $50bn plus,” he told an audience that included IMF chief Christine Lagarde. “All four major reports of international organisations and institutions this year put India among the top four investor friendly destinations.”

But the evidence-versus-perception nut is a hard one to crack — ironically, even in the City, where numbers rule. There is the perception in London, for instance, that Pranab Mukherjee was an anti-liberalisation finance minister. But the evidence isn’t that straight-forward at all. I asked Christine Lagarde about Mukherjee’s presidential statement that “trickle-down theories do not address the legitimate aspirations of the poor”.

Her response was nuanced: “I am delighted with India’s economic success story,” she said. “If there are obstacles to the water trickling down, then these obstacles must be removed. It is only then that the water can trickle down and benefit everybody.” What kinds of obstacles did she have in mind? My guess is of the bureaucratic kind.