Toothless tigers, wounded elephants

Indian policymakers are turning more and more to literary devices to highlight the problem they address. Finance Ministers are prone to end their hour-long speeches to somnolent audiences with a pick-out from national poets, as both a wake-up call and endorsement of their noble mission.

Metaphors and similes are no less in fashion, and it is noteworthy that central bankers are resorting to such figurative turns of phrase to illuminate their vision of India’s economic problems.

The most widely used similes are, of course, from the animal kingdom. Ever since the East Asian economic “miracle” invested those nations with the label of “Tigers” the most natural thing was to look upon India as an elephant: slow-footed, herbivore and lugubrious.

The crisis of 2008 and its aftermath ought to have put paid to the unfair use of the similes (unfair to the kings of the jungle, that is). East Asian exporting countries are still dazed by the loss of their dedicated markets as is China, that other “tiger”. More than anything else, they resemble that toothless and decrepit beast so well captured by Saki’s short story, “Mrs Packletide’s Tiger.”

World-wide recession has humbled every nation and turned “tigers and elephants” more or less human, and rather weak ones at that.

Yet the similes abound. Three months after the Wall Street crisis, The Economist of London was calling India “An Elephant, not a Tiger”. In 2011, hoping to resurrect India in the eyes of investors, RBI Governor D. Subbarao in 2011 spoke of “Rejigging the elephant dance.” Mixing metaphors merrily, the Governor reminded the audience: “But the elephant dance got interrupted by the ‘zoo party’ of the global financial crisis and to get it back on course, we need to rejig the dance.” We now have RBI Deputy Governor K.C. Chakrabarty titling his speech: “Transit Path for Indian Economy: Six Steps for Transforming an Elephant into a Tiger.”( RBI Bulletin, January 2013)

The similes do not last long even though Chakrabarty enlightens us on the “key aspects” of the elephant and the tiger. This is simply the ‘hook’ and Chakrabarty abandons the similes for the more prosaic business at hand: pulling up the Indian economy from its slough of despond: How? In six steps.

Steps for change

Says Chakrabarty: “India’s demographic dividend presents the country with a great opportunity to enhance its growth and seek convergence of per capita incomes with that in the developed world.”

“Median age for India’s population is about 27 years compared with over 40 for most OECD economies. It will add significantly to its labour pool and, even as the median age bucket rises, it will still be at a relatively young 30-34 age bracket by 2026”. But by the end of the century we might not have that dividend anymore if we do not exploit that advantage right now. How?

By investing more on education, health “better skilling” and, of course, more jobs. By these yardsticks, Chakrabarty should know that the demographic nightmare is creeping over us. Forget Budget spends. An Assocham study of management and engineering education reveals poor quality of training in institutions barring the IIMs; campus recruitment is drastically falling. As for jobs, the less said about jobless growth, the better. The largest employment takes place in the informal sector and that does not need “skilling.”

The second step for metamorphosis into a “tiger” is to improve productivity and efficiency. To its credit, the organised sector has been increasing productivity and efficiency, that has resulted in competitive exports, at least in some sectors.

But a consequence of that has been a decline in employment. Economic theory would have us believe that both move together in the same direction, but only if the overall economy expands. The chase for productivity implies a chase for lower costs, and the best place to start that process is by extracting more out of fewer people.

No one can argue against the next step: More infrastructure investments, harnessing natural resources better. Likewise, there can be no argument with more finance for real sector and social inclusion. But these remain policy-driven and administratively sensitive to the warp and weft of governance.

Towards ‘tigerhood’

The most important steps towards “tigerhood” therefore are governance and accountability. To his credit, Chakrabarty does not mince words and casts a wide angle eye on the accountability deficit. He does not single out just the public sector, the favourite whipping boy of the urban middle class, that believes too much government is responsible for the corruption India stains itself with.

This is what the Deputy Governor has to say: “On corporate accountability, the principal-agent relationship between the management or those who wrest ownership and control and the shareholders as actual owners is rather weak. We have seen asset stripping and bankruptcies in this weak environment. This has been especially true where a complex web of companies within business groups prevail.

There is a strong case for simplifying these structures that are often developed to evade taxes, indulge in regulatory arbitrage and to strip assets of the firm for personal use. In recent period, we have come across instances where corporate debt restructuring is sought but ownership commitment of those who have control is rather left weak.”

Chakrabarty cannot help returning to his elephant/tiger similes. But now in recognising the weaknesses in the “tiger” economies, the similes lose their force almost all together. No one would miss them if they were dropped, the exegesis would lose none of its force. The world economic downturn has slowed down China and East Asia to a more lugubrious pace, but more importantly, to a recognition of the need for pause and reflection -- a taking stock of our reckless growth and appetites and our relationship with our resources, our ‘watering holes’ in order to preserve our species from wilful self-destruction.

Tigers and elephants never had those choices.

( blfeedback@thehindu.co.in )

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