Business Today: Editorial

Being Perversely Indian

Trust our esteemed politicians to always be contrarian, no matter how misplaced it is. Take what happened on December 13. Six hours after the daring terrorist attack on the Parliament House, the Communist Party of India (Marxist) leader Somnath Chatterjee and Congress leader Kamal Nath were on television, blasting the government with verbal missiles. Yes, yes, this was a serious attack, they said, almost in unison, with a dismissive wave. But what was the government doing? This, with much jabbing in the air.

If the opposition is constantly looking for ammunition, politicians on the other side of the sarkari divide are constantly seeking pacifiers. How else would one explain Finance Minister Yashwant Sinha's and Commerce and Industry Minister Murasoli Maran's pathetic line of argument that the Indian economy is not doing as badly as is being made out to be?

Maran started this line of argument at his post-Doha press conference. A stray question about the state of the Indian economy at his post-Doha press conference got him very agitated. Why should we worry, he asked, we are among the top five fastest-growing economies in the world. It was a refrain that Sinha picked up and sang at the inauguration of the recent India Economic Summit. He had asked his officials to study the World Development Indicators, he said, and they found that India had the fourth highest rate of growth of gross domestic product (GDP).

Unfortunately, such platitudes fly in the face of figures, which can be pretty relentless. The latest set of numbers on the index of industrial production (IIP) show that industry has grown a mere 1.9 per cent in October 2001 against a healthy 6.8 per cent growth in October 2000. Only the consumer durables sector seems to have improved on last year's performance. Every other sector is going through a phase of depressed growth.

The finance minister will, no doubt, find some ingenious explanation for this. So let's look at the figures put out every quarter by the Confederation of Indian Industry's (CII) Associations Council (Ascon). Out of 122 industries Ascon surveyed, 93 reported less than 10 per cent growth. Of these, 34 reported negative growth. Nor is industry very upbeat about the rest of this fiscal. Not more than five sectors expect growth in the 5-10 per cent range.

Let's zoom in on some micro-level data. Take the capital goods sector, the bellwether industry for the state of the economy. Growth has been negative since February 2001. Or take steel, where growth is stagnant-0.42 per cent in April-October 2001 against 13.62 per cent in the same period last year. The only bright spot is the cement industry, which has posted a 5.12 per cent growth in April-October 2001 from a 4.85 per cent growth last year, thanks to the roads programme. In October, Sinha pointed to the steady increase in non-food credit as yet another source of comfort. But it turns out that the month-to-month rate of increase this year is almost the same as last year. Clearly, Messrs Sinha's and Maran's comforters are not able to keep out the chill of a very serious economic slowdown.

There's another defence Sinha is very fond of using. For years, he said, our economy grew at 3 per cent. Now it's growing at 5 per cent and yet people are complaining. Should we, as a nation, be so unambitious as to use ourselves as a benchmark? Or to take comfort from the fact that we are doing better than stronger economies that are going downhill after having peaked? Especially when we are nowhere near the peaks they attained? Surely India and Indian industry deserve much better? What say, Mr Finance Minister?

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