The Hindu Business Line : New Year pronouncements

I AM writing this on Christmas Day, so here's wishing you a lovely holiday season and a great year ahead! It's nice to end the year on something of an upbeat note. Let's face it — it has been a rough old time for most of business these past two years, so we can be forgiven for cheering for joy with even the most wafer thin piece of good news.

So, is this a genuine recovery we see before us? I don't know but certainly hope so, given the strident cries from the Government at our expense proclaiming a shining India. Of course, you and I know what it is like in reality but we have now come to expect everything in the media to be an `experience' or an event meant for a specific effect, never mind if it has anything to do with reality or not.

One hint that the rosy predictions are not entirely imaginary is the steady stream of good news form stock markets everywhere. The Bombay Sensex continues its rise inexorably, beyond the 5600 mark, and may well go further onwards.

After Saddam was nabbed, even the New York Stock Exchange, itself beset with internal governance problems, is seen joining the festive season's mood. One wonders what has changed so dramatically to account for the feel-good factor in the economy - apart from the feeling itself being something in the nature of a self-fulfilling prophecy.

Yes, it is true that the monsoon has been better than expected, so has the crop but are we not also told that we are now much less dependent upon agriculture and, indeed, have become a nation of small shop-keepers, with services accounting for over 50 per cent of the national product? What is more, we are also assured that we shall be more closely linked to the fortunes of the world economy and the dollar and Euro than ever before.

The greenback, seemingly, is in for a rough ride, and much of the Western world is still coming to terms with the expansion of the European community and the transatlantic tensions over Iraq and Israel. Nor have we suddenly caught up with the huge leeway vis-à-vis China in any manner. So that leaves me rather befuddled as to what constitutes an economic basis for euphoria.

Rather than speak of the year in summary retrospective, I chose to think about ten strong trends which I see emerging or gathering strength over the next twelve months. I chose ten for no other reason than that it was a round number.

Surprisingly, forecasting them was not such a difficult task at all. All one had to do was accept the signals for what they were and not rationalise them. I picked on ten such signals of the shape of things to come, from a sensing of the current state of the economy and the world.

In the corporate world, the demand for transparency in dealings, especially with the consumer and investor, will grow, although compliance will lag behind intent.

The WTO regime will affect more and more industries. Only the prepared ones will survive and flourish. But, if in the policy makers' judgement industry is likely to be adversely affected, chances are the government will try in some fashion to change the regulatory environment to assuage their pain.

The recent telecom policy changes are a shape of things to come. More such changes could creep in imperceptibly in the economic policy of the Government in some industries: telecom, import export, oil, power, textiles, synthetic fibre, and petrochemicals.

There will be certainly more foreign competition not less — and more purely Indian companies arriving at world-class quality and international markets, and on the world stage. Some mediocre Indian companies will collapse at the same time.

There will be no letting up in the widening of disparities between the two Indias. Unfortunately, in a not unrelated development, we shall see greater recourse to arm-twisting strong-arm tactics and violent crime to settle political debate.

The Dubey murder will fade in public memory and something similar will take its place. I see no grounds for thinking that administration will become less corrupt in a hurry, and can only hope that judiciary will remain, above all else, a safeguard of our democracy.

More gurus and god-men and -women will drift to wooing the lucrative corporate sector. There will be many more corporate-sponsored swamijis, which can be a good thing if it merely restores some semblance of a social conscience, instead of treating religiosity as a balancing element for all the shady dealings of business. Prosperity even more clearly visible, growth at 7 per cent per annum average means more than 10 per cent for many. Industrialists will rediscover manufacturing, as a natural for India, while services for export will become a more mature market.

Metropolitan areas will become ungovernable, if simply from a facilities and utilities point of view, although roads will become better, traffic faster but with a higher ratio of fatalities.

Education will be pulled between privatisation and globalisation, on the one side, and saffronisation, on the other. Quality of education will suffer further if the government carries on this way in interfering more and more with every aspect of its conduct — from admissions to fees to syllabi.

More illnesses and epidemics will be imported or globalised. Healthcare has to be privatised and probably will be. Chartered accountants, traders, truck operators and lawyers will continue to be special interest groups. Speedy implementation of the common VAT system across the country will be slower than expected or desired.

Public sector and government employees will continue to fight privatisation. Weaker States' finances will continue to deteriorate, with more populist legislation being enacted nearer the time of the elections.

The Midnight's Children will come up for retirement and find that a lifetime's savings safely invested cannot yield a fraction of the standard of living they have recently become used to.

Nature will continue to produce shock and awe. 50 degrees C will not be a rare phenomenon anymore in May and June; we are going to see recently set records of hot weather beaten easily, especially in water-less Chennai.

Summers will be longer and hotter and last longer, monsoons will set in later and be more erratic in volume and spread, as the global climate change, for so long ignored by even the educated minority, really begins to bite.

India will emerge stronger and be recognised all over the world in many arenas besides cricket, Bollywood and software.

A huge change in the complexion of the economy, society and politics can, however, come about if only Mr Vajpayee stands firm on his statesmanlike pronouncements of recent times, and goes ahead with making a co-operative, relatively tension-free SAARC economic region a reality. That way, certainly, lies sanity and security.

(The author is Director, Institute of Financial Management and Research, Chennai.)