The first phase of voting is only a few days away and yet there is a curious feeling, as though everyone is viewing the process as a spectator, not a participant. People I spoke with in Mumbai, the financial capital, said there was a general feeling of despondency, of disconnect with the government due to concerns about the downturn and the loss of jobs and business. There is a feeling that there is no one to turn to for solutions at this time.
It is now clear that the fiscal and policy measures so far have done little to revive the economy. The Reserve Bank of India (RBI) points out that “credit expansion during the period between 19 December and 13 February, at Rs8,091 crore, was sharply lower than that of Rs86,978 crore in the corresponding period of the last year... The total flow of resources to the commercial sector from banks and non-banks during 2008-09 up to 13 February, at Rs4.98 trillion, was lower than Rs6.08 trillion during the corresponding period of the last year”.
There is a very interesting analysis by Prof. Dilip Nachane, one of the country’s leading monetary economists, in the Economic and Political Weekly of 28 March. He argues that “the stimulus packages in several other countries (most notably the US, the UK, Germany and Singapore) also incorporate a host of special measures to help their vulnerable sections. In contrast, in India, very little seems to have been done towards relieving the distress caused by the crisis to the vulnerable sections of society. Making extremely clever use of the media, India Inc. has succeeded in projecting itself as the sole casualty of the financial crisis. Since official policy finds it extremely difficult to ignore media feedback in a democracy, it is not surprising that the major policy thrust so far has been on rescue packages aimed at salvaging this sector. But just as rescue operations in a shipwreck cannot be confined to first-class passengers alone, the vulnerable sections of Indian society (on whom the media seem to have virtually turned their backs) need help too”. This, he feels, has not been done. He goes on to argue that there is sufficient liquidity in the economy and that there are real dangers of emerging inflationary pressures, and cautions against fiscal expansionism.
Nearly half a million jobs have been lost in India, there are far fewer campus placements, export growth is sharply down, and several manufacturers are running reduced factory hours. Winter wheat harvesting has been affected by non-seasonal rains, cotton prices and yarn prices do not match, and there is general gloom all around. It is not surprising that people are a little more worried about themselves than the elections, and are quite concerned about whether someone is minding the store in the crisis—in fact, whether there is anyone in control at all.
Of course, as long as the election process is on, there is little that can be done in the way of policy interventions.
This does not, of course, mean that the entire machinery has gone to sleep and that we are a rudderless ship. The election process does not mean the absence of all governance—we fought the Kargil war while elections were on, and are responding to terrorist attacks now.
On the financial side, RBI is professionally staffed and is looking at monetary and fiscal developments closely and making the necessary corrections. Banks continue to go about their businesses as usual. The corridors of power, frequented by corporate houses and bureaucrats, are low on footfalls, but this also ensures that the normal process of governance goes on without any “special” interventions.
As a bureaucrat who saw nearly 10 elections in the state and at the Centre, I believe this is the time to put governance in order—in terms of policies and procedures for delivery of programmes, allocation of responsibilities, tidying up inter-ministerial issues, and most importantly, looking at personnel matters. I presume that the bureaucrats at the helm are doing the same.
This time around, we also have the advantage of having a prime minister who does not have to do much electioneering, and hence can focus on running the government.
So, we are in safe hands. But whether this will reassure those who have lost jobs and export orders, those who have no placements and are facing an uncertain future, is another matter. The pity is that none of the parties have come out with a 100-day agenda of what they would do to solve the crisis of the downturn.
The further pity is that this is perhaps the first election where the urban and rural youth is likely to turn up in very large numbers, we would record a very high polling rate, and yet the voters would be disappointed with the choices they find before them in the polling booths.
S. Narayan is a former finance secretary and economic adviser to the prime minister. Comments are welcome at email@example.com