Revive the feel-good factor

Was it just six months ago that no one could get enough of the India growth story? Our music rocked in clubs from Hoshiarpur to Hawaii; our movies spawned schools of exercise, dance and colour ; our spices added flavour to meals everywhere

and our opinions mattered. Suddenly the world is wondering whether it was too quick in setting us on a pedestal next to China… and the stock market has reacted accordingly. The unfortunate thing about this change in environment is that it is of our own creation; whether the problems are scams, inflation, interest rates or a business slow-down.

Let's pick the first — ‘Scams'. In short, people at the “commanding heights of the economy” caught with their hands in the till. I won't analyse the merits of our polity or indeed of our media personalities. Let us instead consider this: In the US, trillions of dollars were lost by various organisations because of a flawed system.

There, the system has hunkered down to first fix the problem, before fixing the blame. The media, while fulfilling its watch-dog role and publishing its critique, was not baying for blood, 24x7. In contrast, our entire establishment (whether government, opposition or media) seems to be bent on tearing down the painfully built India-story. Tilting at windmills

Let us look at inflation. It is a natural consequence of rapid growth and an increase in money supply due to deficit financing. If we were an economy where all transactions were made by cheque, where all credit is regulated and all income taxed, playing around with interest rates could have helped control inflation. But agri-business is a huge parallel, traditional economy.

The rural economy is largely a cash economy. I haven't seen a wholesaler borrow money from the bank and pay off the farmer by cheque. Agri-income is not taxed and not accounted, and it is not a coincidence that when there is electoral activity in the offing, food price inflation spirals. That's why increasing interest rates to control food price inflation is like fighting with your spouse because you are angry with your boss… it hurts your spouse, could get you into serious trouble, and does not affect your boss at all! Instead, we are confronted with the prospect of a slowdown in industrial growth, sharp reduction in capex plans, infrastructural logjams and an increase in budgetary deficit. What you don't achieve is a reduction in the price of onions.

The disillusionment of international money with India is a tragedy, particularly at this stage. Built up since 1991, our image has taken years to get where it is today. Six months is reversible, but we need to approach the problems with that mindset.

There's a silver lining

Firstly, I believe that the core of our system is not corrupt; nor is it intellectually regressive. Despite public perception to the contrary, there are any number of bureaucrats who are quietly working to improve things. We must not forget that while the system caused grief, it is also the system that exposed it and the system that is correcting it. Let's not sell ourselves so short.

Secondly, let us not forget the good news. It needs to be highlighted — the various successes under the developmental programmes; the mobile number portability in the telecom space; the yeoman efforts of various private agencies to improve the lot of the people. The media must put some more sugar in its mix and perhaps juxtapose the good stories with the bad. Thirdly, it must be said that the core of the India growth story is Indian entrepreneurship and not Indian governance. Despite the humongous amount of publicity, the fact is that our system was far more corrupt and opaque in the days of the licence permit raj. Today is better than yesterday and it is also better than the today of any of the other emerging economies.

Finally, the stock market is just one barometer of economic good and we need not obsess over it. It no more represents the economy than Bollywood represents our society. Let us try instead to see if we can work collectively to bring the “feel good” factor back: A feeling that needs self-motivation. Let's not commit Hara Kiri when the world is all set to give us our place in the sun!

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