It is a matter of conjecture as to why a usually tepid PM, Manmohan Singh, chose to adopt a combative posture in his belated statement on the state of economy in Parliament. Theatrics apart, the substance of what he said recalled the Shakespearean phrase about an idiotic tale full of sound and fury, signifying nothing.
Singh regurgitated for the umpteenth time how ‘the fundamentals’ of the economy were strong and that the rupee had merely caught a cold because of US federal bank’s mischief. He seemed to ignore that almost every fundamental of the India economy—the fiscal deficit, current account deficit, economy’s growth trajectory or inflation—today stands skewed. His script had nothing to offer concerned citizens and nervous investors.
The frequent use of double negatives by Singh in his speeches in both the Lok Sabha and Rajya Sabha was significant. “It cannot be denied that the country is faced with a difficult economic situation,” he said and went on to add, “I do not deny some domestic factors, too, are responsible” before listing the external factors—the US’s monetary stance, tensions in Syria—that are supposed to be responsible for the ills of our economy. According to linguists, the use of double negative in a sentence is usually a sign of a reluctant acceptance of a truth universally acknowledged.
Singh’s unwillingness to speak directly could well be an indication of his and his government’s unwillingness to take responsibility for the economy’s state. To be sure, external factors have contributed and all emerging markets, including India, have been hit, but Singh’s government hasn’t exactly earned plaudits for its governance of the economy.
The Prime Minister signalled three reforms that were necessary to address the structural problems—reduction of subsidies, cutting bureaucratic red-tape and implementing the Goods and Service Tax. His attempt, however, to hold the Opposition responsible for the government’s failure to act on these is misdirected. Putting the onus on the Opposition for subsidies and bureaucratic red-tape is subterfuge. These are executive decisions which need no legislative approval. In the absence of concrete measures, nobody is going to take him seriously on subsidies just days after the government passed a profligate food security legislation without making sure that the systems required to implement it are in place.
Singh may be right in asking for MPs across party lines to cooperate in reviving India’s growth story. The country needs political consensus to get its growth back, but that consensus is most needed within the Congress party. What are investors to make of his speech in terms of the way forward or his turning a blind eye to India Inc’s solvency problem and suggesting RBI keep hiking rates which are a sure recipe for a slowdown? How does he reconcile the talk of the need to rein in subsidies with the just-passed Food Bill? Surely, the eminent economist must be aware that the rupee’s fall has brought all fuel reforms since January to nought and that tax issues continue to bedevil industry.
Rash spending, misplaced policies, unstable tax laws, and the absence of efforts to build infrastructure and capacity and also make Indian exports competitive have all played a part in bringing the India story to a premature end. Surely, the disruptive Opposition is not responsible for all this.
The Prime Minister’s speech provided no real solutions to the economic crisis. It did not even inspire the more intangible confidence factor. Singh may pat himself on the back for being the longest serving Prime Minister of India outside the Nehru-Gandhi dynasty, but his longevity has extracted a very high cost and destroyed the nation’s economic well-being.
(preethatanya@yahoo.com. Thomas is Associate Professor of Economics in Barkatullah University)