The discourse on the economy has been hijacked by the bond market types

If you take the trouble to collect the whole set of things that have been done - you need go no further than the finance ministry website - you will realise how pathetic the discourse has been

The government thinks its side of the reforms story is not being heard and therefore discussed. But whose fault is it? Many would say that the government has not been able to communicate effectively. But that is only partly true.
 
The fact is that in the last 15 years India’s economic policy story has been hijacked by the bond market types. I don’t know why this has happened but it is an extraordinary and unwelcome change in the discourse on economic issues in India.
 
Much, if not all, of it is now about finance. It is as if the real sector doesn’t exist.

 

Even within finance, it is mostly about the bond market and monetary policy. No one much bothers about banking, the stock market and other aspects of the financial sector, such as the foreign exchange market. This is not to say that there is no discussion at all. But it is so cursory, sporadic and poorly informed that it is of no use.
 
This has happened in spite of the fact that, firstly, the bond market in India is small and undeveloped and, secondly, that it is largely irrelevant to the economy. Yet, it is all we read about in the business press and see on the visual medium.

 
Even technology, which is the main vehicle of productivity and growth, has taken a backseat. When it is discussed, it is in the context of mobile phones — and now crypto currency. The discussion is at best vapid; at worst, it is ignorant.
 
Thus, most of the time those who discuss it don’t know the difference between crypto currency and blockchain. The result is nonsensical.
 
The real story
 
Those who lead the discussion on government policy ignore the product and labour markets, not to mention the foreign trade. Such discussions take place as there are on broad principles, and not the nitty-gritty.

 
Reading or listening to the discussion, you’d think very little by way of change has happened in the real sector. Yet, nothing could be further from the truth.
 
If you take the trouble to collect the whole set of things that have been done — you need go no further than the website of the finance ministry — you will realise how pathetic the economic discourse has been.
 
The last 10-12 have seen massive and sustained reform in the real sectors. And there has been tremendous acceleration in the last four years. Thanks to the virus, much of it has happened in the last one year.

 
The central objective of these reforms has been to desilt the economic tubes so that economic activity becomes more efficient. Basically, what the government has been doing is to identify the blockages in the plumbing and remove them.
 
Each intervention by itself is, for the most part, small and undramatic. But, taken together, the effect is quite startling. And this possibly is where the problem lies: it is almost impossible to grasp the entirety of the reforms and add them all up to tell a single coherent story. In a sense it is like a vast jigsaw puzzle which no one can put together.

 
As a result, those who are engaged in analysing the economy — and I know most of them quite well — have found it easier to focus on just one aspect, namely, monetary policy.
 
The Rao playbook
 
It is useful, in this context, to recall how P V Narasimha Rao’s government had handled the problem of communication: It had co-opted the chambers of commerce who were ‘persuaded’ to hold an event nearly every week to discuss something or the other.
 
It also commissioned a large number of reports that would be ‘released’ by a minister at the rate of nearly one a month. The Narendra Modi government needs to adopt that play book if it wants to wean the discussion away from monetary policy, inflation, and crypto currency.