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Crash ke side effects

As the stock market plummets, the government is sparing no effort to boost economic growth, writes Manas Chakravarty.

india Updated: Nov 02, 2008 00:57 IST

As the stock market plummets, the government is sparing no effort to boost economic growth. ‘Look at all the hard work we've been doing,’ said a government spokesman. ‘In the beginning, we asked officials from the finance ministry and the planning commission to go boldly on TV and say the economy is fine. When that didn’t work, we got the governor of the Reserve Bank of India to make encouraging noises. And lately, with the Sensex slipping below 10000, we haven’t hesitated in using some of our biggest guns, men like the finance minister and even the Prime Minister, to face the cameras unflinchingly to boost the economy.’ Rumours abound that the government may even persuade President Pratibha Patil to appear on TV to instill confidence, although some are doubtful whether she will have the desired effect. ‘The government strategy is pathetic,’ said a friend of Amar Singh. ‘They need to learn from ICICI Bank, which has roped in Shah Rukh Khan to endorse the bank on TV. We could likewise use Amitabh Bachchan’s good offices to lift the economy. Aishwarya too could help.’

Meanwhile, a violent mob in Bihar has been burning trains to protest against the stock market meltdown, though nobody knows whether this is the real reason or it is just high spirits. A spokesman for the Maharashtra Navnirman Sena put the entire blame for the crash on north Indian stockbrokers. He also took a swipe at foreign investors, pointing out that Goldman Sachs’ letterhead did not have the name of the firm in Marathi.

Market professionals have responded to the new conditions admirably. ‘While I was revising my target stock prices upwards every week last year, I now adjust them downward every hour,’ said a technical analyst proudly. ‘In fact, I’ve taken to writing my recommendations in pencil these days,’ he added, ‘so that I can erase them promptly should circumstances change.’ But economists have come in for a lot of criticism on their failure to predict the downturn. ‘As practitioners of the dismal science, I expect economists to be dismal. Instead of being deeply, darkly dismal, they have been as optimistic as stockbrokers,’ said a disgruntled critic.

The manager of an equity fund modestly said he had been beating the indices. ‘While most of the stocks in the Sensex have fallen by 50 to 60 per cent, my fund is down only 45 per cent’, he smirked. But he was all praise for his father, a retired government official. ‘My dad’s a financial wizard, he has not only managed not to lose money, but has improved his returns in the last few months,’ he said admiringly. ‘I would have loved to do the same, but I didn’t know of this secret investment weapon the old man has. I believe it’s called a fixed deposit,’ he whispered, leaning forward confidentially.

Reports have come in of senior citizens laughing all the way to the bank.

But a note of gloom was struck by a Mumbai real estate developer. ‘I have already slashed rates from Rs 12,500 per square foot to Rs 12,497 per square foot and thrown in a free flower pot and yet there are no buyers,’ he said sadly.

Incidentally, efforts to get bureaucrats to comment on the global crisis have proved fruitless. ‘I haven’t received any circular about it yet,’ said a senior finance ministry official.

The global financial crisis has also led to much self-congratulation from critics of capitalism. ‘We may have a bankrupt economy and terrible famines, but we have never had a banking crisis,’ boasted a North Korean communist. Meanwhile, somewhere in Pakistan’s tribal areas, Osama bin Laden acknowledged that the crisis had done far more to damage the United States than the attack on the World Trade Centre. ‘That is why we plan to award the Al Qaeda Prize for Inflicting Maximum Destruction on Infidels to the former Federal Reserve chairman, the holy Alan Greenspan, praise be upon him, for his stupendous achievement in creating the biggest financial bubble in history,’ he said.

(Manas Chakravarty is Consulting Editor, Mint)