The debate on the crisis in the economy—“will it be 1991 again”—is riveting because of the evaporation of rationality from the discourse. The Congress has patented the formula of profligacy for power. It contends that the rural employment dole, loan waivers, food security deliver the miracle of inclusive growth. You would expect the BJP etc. to contest the idea of such miracles. Instead, it argues about the inadequacy of abracadabra. Economic policy, it would seem, urgently needs the cover of an anti-superstition law!
In less than a decade, India has been converted from a low-cost, high-growth economy to a high- cost low-growth economy. In 2003-04, consumer price inflation was 3.8 per cent and GDP growth was 8.06 per cent. In 2013, GDP growth is 4.4 per cent and consumer price inflation is over 9 per cent. The run on the rupee may be triggered by global factors but the underlying crisis in our economy is the default outcome of voodoo economics.
The credibility of the government is on the run. Every explanation of the government—like the one presented in Parliament on Friday—sounds like an application for anticipatory bail. The government lists out years of high growth as certificate of good character, the PM talks about his standing in G-20 as evidence of reputation in society and blames every factor bar political profligacy. The BJP (and other parties) who hold the brief for prosecution, could have pushed for conviction. Instead, they have repeatedly sounded like the hostile witness called by the defence.
The principal problem is the chasm between government income and expenditure which has fuelled deficits and hurt growth. In August 2004, when inflation touched 7.94 per cent, the Prime Minister declared at AICC that rising inflation was a challenge and assured it would be brought down. Since then, inflation has found mention in 86 of his speeches, consumer inflation has averaged around 9 per cent, interest on borrowings costs 40 paise of every tax rupee and the government’s debt has shot up 10 times.
The BJP repeatedly puts the blame on the ruling regime and its acts of commission. But it evades the responsibility for its own acts of omission. It repeatedly raises the issue of inflation but what is its position on the cause of inflation—the many populist interventions? Every sop scheme of the Congress has passed through Parliament—whether it is MGNREGS, loan waiver or the recently passed Food Security Act. The BJP has repeatedly yielded, conceded, acquiesced. So did others.
For example, it is evident that the Food Security Act will induce fiscal stress—expand deficit by `30,000 crore. The chatterati division of the Congress contends that additional costs will not be more than `9,000 crore and extra procurement not more than seven million tonnes. This begs the question: can minimal expense and procurement expand coverage from 30 per cent to 67 per cent of the populace?
Punjab MP Harsimrat Kaur Badal did well to challenge the idea and its specifics. In comparison, the BJP fell far short. Ditto their stand on the Land Acquisition Bill. It will make getting land harder and stall projects further, crippling investment and growth. Besides, the 80 per cent consent clause is the template for politically connected aggregators to set up shop. Yet, the BJP and other parties voted with the government.
It is clear that the UPA’s borrow, spend on sops and get elected model is fuelling deficits and crippling growth. The way out is obvious: either the government cuts expenditure—subsidies/schemes—or finds resources— taxes/disinvestment—to pay. Is this or any other alternative being proposed by the Opposition? To believe in not opposing the causatives of the crisis and protest about the consequences is simply amoral opportunism.
On Friday, the Opposition had yet another opportunity to corner the government. It was squandered in a contest of competitive petulance. It is not just the BJP, but it carries the onus of oversight as the main Opposition party. Once described by Justice M C Chagla as a viable national alternative, the BJP is flailing to articulate an alternative stand on economic policy. In less than two weeks, the BJP leadership has vacated more ground to the ruling regime than it did in four years. The advantage of the competitive Modi model has been surrendered for petty populism.
Such is the state of the economy that dark humour now clogs broadband chatter. The latest is about a beggar with a placard: “Give me money or I will vote for the Congress again and you will be sitting next to me.” The beggar could well be addressing the Opposition. The political class has unveiled an era of competitive entitlements for votes. It doesn’t cost the parties anything. It is, after all, the perfect PPP model—public funding of private political ambitions.
The competing compulsions of crony capitalism for funds and crony socialism for votes has landed India at this intersection. The question is: Who will speak for India?
(shankkar.aiyar@gmail.com. Aiyar is the author of Accidental India: A History of the Nation’s Passage through Crisis and Change)