With negative sentiments crowding in about the economy’s management over the last three years, you just cannot dismiss the analysts’ prophecies that with Pranab Mukherjee’s expected move into Rashtrapati Bhavan, his North Block seat will have enough room to change the economic climate. (File photo)
Is the Congress pushing Pranab Mukherjee, the UPA II Finance Minister, upstairs into the Rashtrapati Bhavan, because he is the best person, with vast political experience, and therefore best fit for this constitutional job? Or is it being done to get the North Block seat vacated, since he has messed up the economy completely?
Going by the official statement of the ruling coalition in nominating Pranabda, one should believe in the first proposition.
But within 48 hours of the UPA announcing its presidential nominee, two more stunning news items were revealed. On Monday, June 18, one more international rating agency, Fitch, cut India’s credit rating outlook to negative. And the RBI Governor D Subba Rao brushed aside all the industry clamour to cut interest rates and decided to maintain status quo.
Both measures are a slap on the face of the Government, that has been assuring all and sundry over the last few days that India’s ‘fundamentals’ are strong and growth rates would recover from the six per cent level. Fitch is the second agency after S&P to downgrade India’s credit standing. Both have specifically quoted the diarchy in the governmental structure, with the true power residing in the Congress President, and Prime Minister holding the baby, as one of the reasons for the downgrade.
In essence the RBI itself is refusing to believe in the Government’s contention that good days are ahead. Anyone could read between the lines of RBI’s assessment: “persistence of overall inflation, both at the wholesale and retail levels, in the face of significant growth slowdown, points to serious supply bottlenecks and sticky inflation expectations”, the central bank has concluded, in keeping the interest rate at the present high level.
A few other straws in the wind won’t give the man destined to walk into Rashtrapati Bhavan a happy reception either. His own colleague Veerappa Moily, the Minister for Company Affairs, has told a TV channel that there was need to have a relook at the retrospective tax provision made in the latest budget. He is worried about the “negative sentiments” that this tax has created, and wants a “relook to make the investment climate favourable”. That’s a soft way of telling his FM that your much-hyped policy is the stroke that killed the goose that lay the golden eggs.
With all these negative sentiments crowding in about the economy’s management over the last three years, you just cannot dismiss the analysts’ prophecies that with Pranab Mukherjee’s expected move into Rashtrapati Bhavan, his North Block seat will have enough room to change the economic climate. In other words, the Congress wanted Mukherjee to move out to create that vacancy.
Neither international rating agencies, nor the country’s own central bank, believes in the promises made in the budget — that subsidy would be reduced to a level lower than two per cent of GDP and fiscal deficit be brought down to 5.1 per cent — even after four months have passed. With what face, then, does our PM hold forth at the G-20 meeting in Mexico, asking global leaders to manage their financial affairs better in the context of the Eurozone crisis, when he can’t manage neither inflation nor fiscal deficits in his own country?
It could just be that Mamata Banerjee was not far from the truth when she claimed that Sonia Gandhi had permitted her to reveal the name of the Congress’s choice for the President’s post even before it was officially announced. In politics, truth is often read between the lines. What better way to get several birds killed with one stone than to get someone else do your unpleasant job? But the million dollar question is: should a failed FM be elevated to the office of President of the Republic?
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The opinions expressed in this column are the author’s own