A Gathering Storm?
Economic malaise in India
I'm sure Winston Churchill wouldn't object if he were alive to my plagiarizing the title of his book if he were to read this article. The commonality ends there as my article is on quite a different subject. Though he had no great opinion of India or Indians, even he would agree I'm sure that living in a bubble is not a sustainable state of affairs;neither for nations nor individuals. Sooner or later reality is bound to catch up and burst it. That seems to be the case as far as the Indian economy is concerned where fact may be stranger than fiction.
The fool’s paradise that some pundits or specifically pundit would like us to believe is that India is the next China in terms of high economic growth. The name of the game here is not to name so I am not naming anybody though those of you who have been following the Indian print media would have a fair idea whom I’m meaning.
The reality is that a Greece like situation might be developing as far as the Indian economy goes. Indeed that has been my perception for some time now and the alarm bells on that score seem to be ringing.
Most of us would like to be right all the time but this is one of the things I wish I hope I'm wrong in. The un-informed may be wondering what I am driving at. But enough of generalities, let’s get to the specifics and that is with regard to Dr. Subramanian Swamy’s letter to our distinguished P.M. calling upon him to set up a Crisis Management Committee to tackle an impending economic meltdown of the Indian economy, expected sometime between November-February 2016.
Of course some of you might dismiss such notions as being alarmist or even politically motivated but Harvard educated Dr. Subramanian Swamy has no political axe; being a part of the present ruling dispensation.
What should alarm us is that this is a government which has trumpeted itself as being a harbinger of economics good times or ‘good days’ as it would have us believe. Nevertheless delivering robust economic growth under the ‘India Shining‘ platform did not prevent a drubbing at the polls for the Hindutva forces under Vajpayee in the past. Now reality of a different sort appears to be about to catch up with NDA – 2.
Factors that could have led to such circumstances is a matter of conjuncture. A probable cause though could be the parlous state of public banks finances brought on by reckless populist social welfare schemes. Or that at least is what some media pundits would like us to believe. However what is pertinent is that the ‘Make in India’ gimmick of the present dispensation might be on its death bed.
Similarly while Dr. S. Swamy might have correctly identified the malady, it’s a matter of speculation whether the solutions for meeting a potential tax shortfall such as tax breaks to the middle class and making up a potential tax shortfall by re-auctioning spectrum and coal blocks are realistic. Too many vested interests stand to lose and might unite to frustrate such efforts, particularly in the case of spectrum which has just recently been auctioned.
Other than that the important point we may note and some posts indicating this on social media have appeared in the past few months is that India might be on the verge of an economic or at least a serious banking crisis.
I don’t know whether humanity is heading towards a post-human future like Francis Fukuyama would like us to believe but I tend to agree with ‘The Huffington Post’ that the games Indian politicians have been playing with the economy seem to have come a cropper with potentially dire consequences.
© 2015 Siddhartha S Bhadrakumar