Is India shining?

Alliances are a matter of arithmetical progression; issues, of geometrical progression. In the forenoon of December 30 2003, the Pranab Mukh...

Alliances are a matter of arithmetical progression; issues, of geometrical progression. In the forenoon of December 30 2003, the Pranab Mukherjee committee submitted its report to the Congress president; by the afternoon, she had called the DMK chief and over the last three weeks the NDA has lost component after component as the juggernaut of the alternative alliance keeps rolling. Perhaps my personal target will still be fulfilled of formally launching the alliance on Martyrs’ Day to zero in on the point that the alliance is to bring together all those who oppose the parties whose ideological orientation and nationhood goals are indistinguishable from those who conspired to murder the Mahatma. The portrait hung insultingly opposite Gandhiji’s in the central hall of Parliament is testimony to who is fighting whom. Gandhi versus Godse is what this election is essentially about.

The subsidiary issue: is India really shining? This column has already dealt with two of the switches the NDA is claiming are lighting up our darkness — GDP growth and employment. To briefly recap, one quarter does not make a summer. Nor even do two. Year-end 8 per cent growth would still average out over the last six NDA years to just about the growth rate achieved twenty years ago, in the decade of the eighties. Moreover, at 8 per cent in this Year of Recovery from devastating drought, growth would be nearly 4 per cent lower than in the last comparable Year after Drought, 1988-89, when the economy grew by 10.87 per cent. As for employment, the NSS 57th round, just out, has only confirmed what every unemployed young person knows from bitter experience: net employment creation has been averaging 30 lakh per year, a mere one-fifth of the net addition every year to young men and women looking for a living.

So what puts the shine on the NDA’s India? Foreign exchange reserves of over a billion dollars, for one. And a booming stock market, for another. When Manmohan Singh became finance minister in mid-1991, reserves were down to $2 billion. By the time he demitted office, they were up by a factor of 15. Over the six years of the NDA, reserves have expanded by a factor of two. Had six years of Yash-Jas been anything like the five years of Manmohan, reserves should have been at a thousand billion, not a piffling hundred billion dollars. In any case, how much of the reserves constitutes export earnings and foreign direct investment? The appreciating rupee has taken the wind out of our exporters’ sails. As for foreign direct investment, whatever increase took place was in the halcyon years 1992 to 1997, when FDI climbed from the negligible to $4 billion a year. It has remained stuck at that level, with several annual dips below that figure, in the six years of the NDA.

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Conversely, the sensex has boomed because foreign institutional investment has boomed. The inflow of FII money has been of the order of Rs 50,000 crore. Added to that is a like amount of domestic mutual fund investment. So, the stock market has shot into the stratosphere. In a space of nine months, April-January, the sensex, which was hovering around the 3000 mark, is now hovering over the 6000 mark. Excellent news for “saandhs” and “mahasaandhs” — bulls and big bulls. But what is in it for the rest of us, who prefer being ordinary men and women in preference to bulls or bears? For those 95-99 per cent Indian voters who do not play the stock market, the boom in the secondary stock market is news to celebrate only if it translates into new investment (and, therefore, new jobs) in the primary capital market. The JPC pointed out that the root cause for the collapse of the market last time it breached the 6000 mark was the mismatch between the primary and the secondary markets. We see the same mismatch in the boom of 2003. As against some Rs 1,00,000 crore pouring into the casino of the secondary market, the total number of new issues (POs — initial public offerings) in the whole of 2003 was no more than — hold your breath — fifteen! That’s it. The total mobilisation of new investment in new ventures was a trifling Rs 2000 crore. Half that amount was mobilised by allowing the general public — rather than the NDA’s favoured fat cats — to get a slice of the disinvestment cake by buying into Maruti. With such a gross mismatch between the primary and secondary capital markets, the NDA is sowing the wind and will reap the whirlwind. It took 24 hours one late February day in 2001 for foreign institutional investors to bolt the Indian market and big ticket Indian players like Reliance Securities to decide not to “redeploy” their investments on the National Stock Exchange’s Automatic Lending and Borrowing Mechanism. With that, Yashwant Sinha’s “dream budget” vanished into thin air like a passing puff of smoke. How can this boom last with the fiscal deficit running at 40 per cent over target and a government gone mad announcing populist schemes worth tens of thousands of crores of rupees they just do not have? This is not India Shining. This is self-abuse.

The third boast is the Golden Quadrilateral. For all those whizzing from Delhi to Mumbai by truck, it is a great experience. The most thrilled are those who whizz business class clutching their pink papers from Delhi to Mumbai by plane — fog willing. But how many votes will that poll among those crores of voters trying to get from Mayiladuturai to Pattavarthi and equivalent? I recall the sobering lesson I learned when I boasted from a platform I was sharing with Sonia Gandhi in my constituency that I expected to be able to arrange tourist flights to see the Danish fort at Tranquebar and someone in the audience wryly muttered that it would be enough if I would simply get the bus to Porayar to run on time.

The same goes for telecom. The voter may not understand the intricacies of the telecom regulatory scam, but while millions of consumers cradle their cellphones, the better part of a billion potential consumers are waiting for the VPT — the village panchayat telephone, solemnly promised through enforceable binding contracts with government but ignored, for the most part, by telecom ministers.

The battle is joined. May the best alliance win.