Wind up the Ministry of Gloom

Now you can laugh at the markets, hold them in contempt and trash those who even suggest that the markets are some sort of an indicator of the health of the economy or the national mood. Just last week The Sunday Express carried an interview with the CPI’s most eminently quotable D. Raja, who reminded us that there were still many countries that had no stock market and did we really think they had no economy!

Raja may be right in that the market is irrational, wayward, sentimental. But that is the point. Why is the same sentiment not perking up when there is so much good news? If you had suggested to some fund manager in April, when the index was already in the 6000-plus range, that you would give him, on the morning of June 11, a front page like this, he would have rushed to buy index futures, who knows, at 7,000. Why is he still cowering in panic, selling at every 40-point rise?

It is not as if the economy has tanked. It is not because he hates the Left so much that he would rather sell, book humongous losses, flee and “punish” the people of India for voting out the BJP as is often suggested by the conspiracy theorists of the conscience-poverty mafia. It is, instead, because the “mood”, the “sentiment”, the “confidence” have all tanked. And that collapse is not confined to the markets. It is spread nation-wide, is harmful in the extreme, is entirely uncalled for and is, frankly, not so difficult to fix.

The last thing a new government needs is a negative, dark, despondent mood. It is a truism in the democratic system that the arrival of most new governments, almost as a rule, is accompanied by a positive, upbeat mood. A new government is entitled to a honeymoon period. This coalition, however, had a peculiar problem. Since the last incumbent was already seeking re-election on the claim that India was shining, the challengers had to say the whole idea was bogus. They won the argument, but must they now get so obsessed with it that it robs them of their own initial honeymoon in power?

With the election already won, the coalition, cabinet formation and the CMP all out of the way, it is vital that Manmohan Singh and his team get down to changing this mood. Disinvestment, as A.P. Bardhan said, can go to hell (a pity English language can never give you a correct equivalent for his immortal bhaad mein jayein). But the national mood, by and large, has to lift. You can disagree with the BJP with the degree or the depth of the feel-good feeling, but in the year preceding the elections India did build up a positive mood of the kind not seen for years. The economy, as this government also says, is robust. Terrorism has been down, international equations favourable, a most promising peace dialogue with Pakistan is on and, most important of all, India was getting so much good press internationally.

The change of government, by itself, should have been no negative. Slowly, even the western press and think-tanks have begun to acknowledge and applaud India for being able to change governments so peacefully, democratically, and its political system for being able to build coalitions despite wide ideological and policy differences at a time when most countries with our kind of per capita incomes are primarily dealing with issues of stability, survival and double-digit inflation. The real beauty of India is the combination of an unforgiving voter who changes governments with a regularity not seen in much richer democracies and a political system mature enough to bring change with continuity, without rocking the boat.

That maturity showed, for example, in the way the CMP clearly promised that all WTO commitments already made will be honoured. But somehow we seem to have junked it in our popular as well as political discourse. An entirely unintended consequence is that we are giving the very idea of reform a bad name. We say that the national highways programme that the NDA started was a very good thing. We also say that we must build on our head-start in the services industry, celebrate our lead in the BPO business, or that our unprecedented foreign exchange reserves give us both, a chance to innovate as well as to indulge in some welfarish splurging. But why are we shy of acknowledging that none of this would have been possible without reform, initiated in 1991 by the same team that is in the saddle now, and then carried forward by the NDA after initial doubts?

The problem is compounded by the negativism inundating the CMP. A document which could have easily been worded — with the same policy objectives — as a charter of rural development, agricultural growth and industrial competitiveness reads, instead, like a dark, daunting agenda for recovery and recuperation after some long, debilitating war. As if India was suddenly caught in mass starvation, deprivation, and sliding downhill. I am not sure if Manmohan Singh, Chidambaram, or Sonia Gandhi would agree with that caricature of India 2004. But we are still a $500 per capita income society. Lots of people are still unhappy and deprived, and no deadly virus spreads faster than such negativism.

Manmohan Singh and his team will have to change this before it is too late. It is not a question of merely a dream budget, the growth rate, and the markets can go to hell. For a society like ours to break out of its trap of low income, prejudices of caste and communalism, inequality and deprivation, hard decisions will have to be taken. And howsoever you may choose to describe them, from the implementation of VAT to higher spending on education and agriculture, from giving functional autonomy to some PSUs to case-by-case privatisation of others, these will all have to be reformist decisions. It might just be easier to do all that in a mood and environment that looks hopefully at the UPA’s future rather than keep cursing ruefully the NDA’s past.

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