Unless you have your head in the sand, it is clear India is looking at its third drought in the last 10 years. Even though this may not be as severe and widespread as the one in 2009, the consequences would be devastating because of the difficult circumstances—rapid paring of growth to sub-6%, even as retail inflation hovers in double digits—that are prevailing.

Unless you have your head in the sand, it is clear India is looking at its third drought in the last 10 years

The previous day, an investment banker, otherwise a mild person, worked himself into a frenzy over the prolonged policy paralysis, rapidly dipping growth and accelerating inflation. According to him, the growing joblessness could stoke social chaos that would make the Arab Spring look like a whimper if the Union government did not immediately effect a course correction. Whether this extreme circumstance pans out or not, it does not matter; instead what matters is that both within (at least some sections) and outside the government there is a growing sense of disquiet about the fallout of the economic mess.

The onus clearly is on the government.

However, instead of embracing the problem, the Congress-led United Progressive Alliance (UPA) has found itself a new distraction. While the kaun banega rashtrapati game concluded on Sunday, where a lot of the social capital of the UPA was expended in rallying support for Pranab Mukherjee despite opposition from within, the coalition has now got fixated on the kissa kursi ka game—after Sharad Pawar, an otherwise committed ally, decided to up the ante against the alleged Congress mismanagement of the coalition. Since the Nationalist Congress Party (NCP) is in suspended animation—as neither has the resignation of its cabinet ministers been accepted nor rejected—there is no political charge of the agriculture ministry. As a result, it is the bureaucrats who are undertaking drought reviews, while other arms of the government sotto voce let it be known that the monsoon will pick up.

Unlike sentiment, the monsoon is a natural phenomenon that cannot be talked up; it is there or not there. For the record, the cumulative rain deficit for the entire country from 1 June to 20 July was 22%. More worrying, there was no region without a rainfall deficit. The deviation from the long-term normal average rainfall was -5% for east and north-east India, -39% for north-west India, -26% for central India and -24% for the south peninsula.

A setback will definitely impact the farm economy. It means that while the services and manufacturing-led growth engine slows down, making job retention that much more difficult, the fallback option of Indian agriculture won’t necessarily be there. Already we have seen that even in the high growth phases, employment generation was far from adequate; defined as jobless growth. Every year India adds about 10 million to the workforce; yet the latest trends based on the National Sample Survey Office (NSSO) data show employment generation annually was less than 400,000 in the period between 2004-05 and 2009-10, when growth in the economy averaged 8.43%,

Things are only going to get worse from now on. It will be the first real economic shock that the entitlement generation will witness and experience. How they deal with these new circumstances is what the government functionary was alluding to.

Worse, the decline of the political parties has created a vacuum, which precludes dialogue between the economically disenfranchised and authorities even in the organized sector. The bridge that political parties provided between, say, the management and unions, even in the organized sector, is now not there. As a result, conversation tends to be polemical with extreme consequences.

In the final analysis, it is clear to us that difficult times are around the corner. The public is apprehensive and restive. But the big question is, what is our Union government thinking?

Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at capitalcalculus@livemint.com

Also Read | Anil Padmanabhan’s earlier articles

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