New Delhi, Feb 14: Who cares about economic growth when the World Cup is on. Or, is there any other reason why the news that this year’s growth rate of the Indian economy is likely to be no more than 4.4 per cent has not made much of a splash in the media? When was the last time the Indian economy grew by less than 5 per cent? Two years ago. Year 2000-01, to be precise. Before that? Remember 1991-92?!
In a span of three years, 2000-2003, the economy has had two years of sluggish growth by recent standards. The average rate of growth of the Indian economy in the decade 1980-89 was 5.4 per cent; in the decade 1990-99 it was 6.2 per cent. In the five-year period following the reforms of 1991, that is 1992-97, the economy grew by nearly 7.0 per cent.
In the first three y ears of the 21st century, at a time when the prime minister and the Planning Commission have set a target growth rate of 8 per cent and business gurus like C.K. Prahalad, business leaders like Mukesh Ambani and business consultants like McKinsey say 10 per cent is doable, the economy is ambling along at an average growth rate of 4.6 per cent.
So. How come no one is making any noise about this? Forget everybody else. How come the leader of the opposition in Parliament, Sonia Gandhi, and India’s principal opposition political party, the Indian National Congress, are not crying hoarse: “We gave growth, they are giving you the slowdown!” Not a word, not a soundbite, so far.
Why is Sonia Gandhi pulling her punches on the Bharatiya Janata Party’s handling of the economy? Is it because the BJP may say that in her first 11 years in office Indira Gandhi produced only 3.5 per cent growth? But when Mrs G returned to power in 1980 she, and subsequently her son Rajiv Gandhi, followed up with an improvement, generating a decade of over 5.5 per cent growth. But the real big deal was that the Congress government of P.V. Narasimha Rao and Manmohan Singh which produced five years of near 7 per cent growth.
Therein may lie the catch. Is Sonia Gandhi fighting shy of holding up the Rao-Singh years as a period of exemplary economic management? If she and the Rao-baiters around her do not want to give him that credit, they can still claim honours for the party by underlining the role of Manmohan Singh, who remains her loyal advisor and the party’s most respected leader.
Using the argument that policies have an impact on performance with a year’s lag, the Congress can show that Manmohan Singh’s policies of 1991-96 delivered 7 per cent growth in 1992-97, while the Vajpayee government has so far delivered 4.9 per cent growth in 1999-2003! This is big news. Yet, the combined opposition isn’t making much of it. The Left parties may be fighting shy because they do not want to endorse the policies of Rao and Singh, and the Congress under Sonia Gandhi may be having the same reservation. A pity.
In fact, Sonia Gandhi should take the initiative and claim Manmohan Singh’s record in office as a vindication of her husband’s thinking on economic policy. Which it was. Indeed, both Rao and Singh never tired of repeating that they only implemented the policies advocated by her late husband who would have done precisely what they did if he had survived the assassination. Is the Congress caught in a conundrum on economic policies? That to criticise Vajpayee they must at least praise Narasimha Rao? Presently it is criticising the Vajpayee government for pursuing precisely the same policies that its own governments have advocated in the past.
It would be more convincing for the electorate if the Congress Party owned the policies of Manmohan Singh and refreshed public memory about the economic record of its government in 1991-96, and indeed the contribution in their time of a Nehru and a Rajiv Gandhi, rather than compete with the Sangh Parivar in the promotion of bovine economics and dung therapy.
As for the National Democratic Alliance and the BJP, it is entirely understandable why they don’t talk much about the economy. The only NDA leader with achievements on that front is Andhra Pradesh Chief Minister Chandrababu Naidu. None of the other NDA leaders even understand what economic policy is all about.
It must be particularly galling for the chairman of the Planning Commission, who also happens to be the prime minister of India, to find the five-year plan target of 8 per cent crumble within the first two years. After 4.4 per cent in the first year of the plan, and an expected 6 per cent in the second year (and don’t believe anyone who talks about 7 per cent next year), how can the five-year period, 2002-07, yield an average of 8 per cent? Forget it.
In fact, the government has already brushed the 8 per cent target under the carpet. No one talks about it these days. Perhaps even the prime minister must be wondering why the Planning Commission took his Independence Day speech so seriously. Okay, he got carried away and said we should log 8 per cent growth. That was meant for newspaper headlines. Couldn’t the economists at Yojana Bhavan have been more assertive and talked the growth rate down? They tried. Who was listening?
Now you can understand why the ruling party is raising the temperature on terrorism and on Pakistan and Bangladesh. Give the voters something to get angry about other than the economy! What Vajpayee, Advani and their advisors should understand is that it is okay for George Bush to use “hate Iraq” politics abroad to win elections at home, but it is counter-productive for India to do so. War-mongering and hating a distant enemy don’t hurt the US economy as much as the unabated talk about terrorism hurts the Indian economy.
By constantly talking about terrorism in the region, by upping the ante against Pakistan and Bangladesh, the government is not helping calm the nerves of investors, some of whom seem to now prefer investing abroad to investing at home. Such talk can help divert attention from weak economic performance, but it can also contribute to the persistence of such weakness. The sooner Vajpayee understands this the better for the economy.
Bureau Report
