By Vijay Darda | 02-09-2013
There was the usual critical response from the opposition in the Rajya Sabha, after prime minister Manmohan Singh made his statement on the falling rupee. Nothing surprising about the opposition going full throttle against the prime minister, it is their job. But in the din, some key messages were lost. The most important being that the prime minister wanted all of us to come together to tell the investors-both domestic and foreign that the India “remains a viable, bankable, credit-worthy proposition..” His other important message was that the falling rupee is not all that bad, and some corrections were due to make our exports competitive. He was of course concerned that the declining rupee was not a good thing for the economy, and promised several reassuring steps to contain the current account deficit that is responsible for this slide in our currency.
But then the question that comes up to my mind, is if this crisis is not about the falling rupee, and if the decline in rupee’s exchange rate vis-a-vis the dollar is not all that bad, then why do we have to convince the investors that India is still a bankable proposition? What is it that has happened for the investors to make them feel otherwise? In short what has taken away their confidence? To my mind, this loss of investor confidence is the real crisis.
We trust that the domestic investor would keep his faith in the country if not for anything else, then for sheer patriotism. Besides, in so far as the foreign investors are concerned, we have all been smug in our assumption that the enlarging size of our middle class, and the purchasing power of our people is enough to lure any prospective investor who is looking for a marker. The Indian market has had a lure for the foreign investor since time immemorial. Even the British had first come as traders, and their imperial rule thrived on our twin strengths-the capacity to give them raw materials for their factories and the ability to consume the finish goods they were keen to sell us. So, we have been a credit-worthy and bankable proposition much before the advent of the globalised neo-liberal economy. Then how has it come to pass that we have to renew this faith?
As a parliamentarian, I get an opportunity to interact with the senior decision makers at different levels. Civil servants, top managers of public sector undertakings, and their colleagues make presentations at different meetings, and they all exhibit a sound grasp of the issues. I cannot reveal the details of these meetings, but I must hasten to add that the quality of candour and fairness in these interactions is so high that it would shock all those who have been in the full-time business of running down politicians and the entire establishment in the country as corrupt and dishonest.
This is not to join a debate on corruption and transparency, because these are twin issues on which there would always be a need for doing better than what we have done. I make a mention of these meetings, only to convey the sense of despair that is felt by these senior decision makers, as they dread the notion of being hounded out for their decisions in their post-retirement days. My proposition is simple: If a senior civil servant gets a feeling that if on clearing a file he may have to face the music later on, then he prefers not to take that decision. This for me is policy paralysis. We cannot collectively deny that in the last few years we have pushed the country into this syndrome.
The union minister for commerce Anand Sharma too has accepted this position, but has sought to pin point the blame on the courts and the CAG. To my mind, he is only partially correct as the entire 2G debate is rather skewed in the public domain. The fact that the Indian telecom revolution which allows millions of people like you and me to talk at less than 1ps per minute in less than 10 years from a call rate of Rs 32 per minute is taken as a given and the presumptive loss figure of Rs 1.76 lakh crores gets the upper hand. So, when the CAG and supreme court were delivering body blows to the economy, there was a kind of obscene revelry in the media and among the middle classes that the politicians and the ruling class was getting kicked and it served them right. The opposition naturally was enjoying the government’s plight. But then at that time, no one bothered about the damage that was being done to the investor confidence. No one cared to realise that if investors find their licences cancelled by the Supreme Court, then the future investors would be wary. But many of us saw this coming, and have been unfortunately proved right.
Even in the matter of falling rupee, my business friends had told me in the month of April that it would sliding down to ` 70 for a dollar, and they still predict its further fall. I completely agree with the prime minister that if we have enjoyed the fruits of our global linkages we should be prepared to live with some shocks.
So, in that sense, the falling rupee is not my real concern. But I am not at ease with the falling investor confidence, and I feel that the situation gets aggravated by the day when the situation is being left to the mercy of the old phrase-law shall take its own course. I am a staunch believer in the checks and balances of democracy. I treat it as the beauty of our system. But then it does happen sometimes, that the beauty of a thing becomes a curse for its existence. May be the same thing is happening to our systems, their beauty has become a curse and we are suffering from it. This is perhaps, the essence of the current crisis.