Between them, these six people have created a political climate more difficult for business, indeed more hostile to business, than at any time since the mid-1980s. It’s not just crazy new laws, but also retrospective tax changes, arbitrary and excessive penalties on companies, stupid conditions when inviting foreign investment, poor macroeconomic management, and no predictability about what might come next says T N Ninan …
Kapil Sibal said in Parliament the other day that politicians are the most accountable among all categories of people. So, how accountable do six people, who between them have run the economy these past five years, feel as they survey the mess around them? All but one of them spoke recently. Sonia Gandhi told Parliament that if there was no money for the “food security” programme, then money would have to be found – but she did not care to suggest how. She also said that if the public distribution system had its defects, they would have to be fixed – again, the details were beneath her.
If the isolation at 10 Janpath is not like living on Mars, the Congress President must know that the economy faces urgent challenges, and that the last things it needs are irresponsible laws; so she must tell us whether she really thinks that two-thirds of Indians go to bed hungry. Accountability, Mr Sibal?
Then, the Finance Minister appeared to ignore a good rule in public life (don’t criticise your predecessor or successor). His comments about economic policy in 2009-11 were interpreted as targeting Pranab Mukherjee, who having become the President can only seethe in private. To his credit, Mr Chidambaram confounded sceptics (including the writer) by controlling the fiscal deficit last year, but he has focused more on financing the current account deficit than on addressing that deficit; taxed gold imports and revived its smuggling, instead of asking why people prefer gold to financial instruments; and bungled the attempt to arrest the rupee’s fall. Care to guess what a future Finance Minister might say when the time comes?
D Subbarao responded later to the criticisms about his record as Central Bank Governor. He was man enough to admit that he may have got it wrong on monetary policy, but he also gave a parting shot to the Government and specifically the Finance Minister. But surely, Dr Subbarao cannot pass the buck entirely; he has to bear some of the responsibility for allowing the rupee to stay too long at a level that priced out exports and caused the gaping current account deficit for which he blames the Government.
As for Manmohan Singh, he was anodyne in his statement on the economy.
Even those favourably disposed towards him have been forced to recognise that his prolonged inaction and weak-kneed acquiescence to steps that damage the economy, will be permanent taints. In Ratan Tata’s damningly simple phrasing, he has failed to provide leadership. Finally, Montek Singh Ahluwalia’s espousal of the idea of public-private partnerships has led to flourishing crony capitalism, and a backlash against business. More accessible than the others, Mr Ahluwalia is ever willing to step up to the plate and defend the Government, with his usual smooth articulation. But he must know that he carries progressively less conviction as the Government’s record in office becomes steadily more indefensible. He could be seen as the boy on the burning deck.
Between them, these six people have created a political climate more difficult for business, indeed more hostile to business, than at any time since the mid-1980s. It’s not just crazy new laws, but also retrospective tax changes, arbitrary and excessive penalties on companies, stupid conditions when inviting foreign investment, poor macroeconomic management, and no predictability about what might come next.
Still, if the rapid economic growth that made so many politicians so unhappy becomes history, even as aam aadmi spending balloons, we might get to settle the Sen vs Bhagwati-Panagariya debate — as to which of the two is better for getting rid of poverty.
– BS : Six people responsible for India’s economic crisis