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No need to panic

The government said the fundamentals of the Indian economy are strong. The government said we are doing better than Mali and Madagascar. Manas Chakravarty writes.

columns Updated: Aug 30, 2013 10:02 IST
Industrial production,declining rupee,falling

Day 1. The government said the fundamentals of the Indian economy are strong. The rupee fell, as did stocks.

Day 2. Industrial production contracted. The government said we're doing better than Mali and Madagascar. The rupee plummeted. Stocks wore a bemused look.

Day 3. Inflation has come down by 0.317%. The government crowed and said it's time to cut interest rates. Reserve Bank officials said on the one hand it was, but on the other it wasn't. The rupee dived. Corporate profits plunged. Economists compared the situation to the Asian crisis.

Day 4. "Anti-national enemies of the State who buy gold are responsible for the fall of the rupee," warned a minister, announcing stringent measures against gold imports. Stocks sank. The rupee fell off a cliff.

Day 5. A government spokesperson simply said, "Thank God it's Friday."

Day 8. The Reserve Bank of India blamed speculators for derailing the rupee and said it would take stern steps against them. Several ministers did an aerial survey in a helicopter over the Reserve Bank and Dalal Street to assess the damage. Economists wondered aloud why the rupee didn't fall today. They said it was like the crisis of 1991.

Day 9. International credit rating agencies threatened to downgrade India's rating from 'Poor' to 'Putrid.' In an immediate reaction, the government appointed an Expert High-Powered Committee of Ministers to look into the rupee debacle. They also plan to bring stockbrokers under the ambit of the Food Security Bill. The RBI sold bonds. Bond yields zoomed. Stocks crumbled.

Day 10. The finance minister said investor confidence in India was strong. He said he had received an email from Nigeria that promised to send him a billion dollars on payment of a small fee upfront. Bond yields skyrocketed. Business confidence expired with a sad sigh.

Day 11. Economic growth has fallen below 5%. The rupee swooned. Banks raised interest rates. Companies laid off employees in droves. Economists said the situation was akin to the Great Depression of the 1930s. The government warned traitors who imported TV sets.

Day 12. Thousands of people were caught trying to sneak into Bangladesh today. "We heard economic growth was higher there," explained a dejected would-be illegal immigrant. In a pro-active move, the government took out full page advertisements in all newspapers saying, "Don't Panic". The RBI bought bonds and said it wasn't panicking. Foreign investors panicked, selling bucketfuls of stocks and bonds. Economists said the situation was similar to the total collapse of the Indus Valley civilisation in 2000 BC.

Day 15. The government said its astrologers had assured them things would be better soon. RBI officials bought bonds, sold them, bought dollars, sold them and finally, closing their eyes with holy dread, wove a circle around the finance minister thrice. Government officials joined in and, in a desperate effort, together they went up Mount Kailash and danced nude in anti-clockwise circles in the light of the full moon, chanting monetary mantras all the while.

Will it work? Will Armageddon be averted? Read the business pages this week for updates on the scary serial.


Views expressed by the author are personal

First Published: Aug 24, 2013 21:44 IST