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Who killed India's growth machine?

Will we continue down the slippery slope, can we grab onto a glimmer of hope?

Nadir Godrej 

Will we continue down the slippery slope, can we grab onto a glimmer of hope?

Our was very bright

And everything was going right.

Why, double digits were in sight
But suddenly we had a blight.

Now five per cent seems like a stretch.

The hero has become a wretch.

Indeed there are suspects galore
And I don't think we can be sure
Who did it but we can guess
What the origin is of this mess.

The usual suspects should be there
Bad governance has its share.

The claimed that he could see
Some scams in coal and in 2G
And whether you agree or disagree
These sectors slowed quite visibly.

* * *

High taxes act like a noose
And often kill the golden goose.

Now golden geese of course are rare
But every goose has its share
Of feathers that might well be plucked
If the goose has not ducked.

Colbert while governing his nation
Observed the art of good taxation
Was plucking the goose with minimal fuss.

In the previous budget we missed this bus.

Pursuing was such a bar.

In snubbing the court we went too far.

If Vodafone and Shell are extorted
Then investors can't be exhorted
To invest in a country that's fickle.

How do we get out of this pickle?
This isn't something we can afford
We badly need funds from abroad.

Chidambaram's aware of this effect
And he's been more circumspect
But all the same the market fell
When accountants couldn't tell
What the fine print really meant.

Would IT sleuths then be sent
To Mauritius for investigation
Of Residency Certification?
No one proved to be proficient
At figuring, "Necessary but not sufficient".

The clarification was very fast
But can one conclude the danger's past?

* * *

Why are we always trying to truss
The goose? This merely causes fuss.

For goose must be allowed to grow
In order that the feathers flow.

With all this fuss we fear one day
The geese may all just fly away.

Some think by far the biggest hits
Would be our dual deficits.

The current account is pretty bad
And yet I feel somewhat glad
That the size of the deficit
Would be a nearly perfect fit
With our immense imports of gold,
Which isn't consumed and could be sold
If of course the need arises.

Let's not be hung up on mere sizes
But see the composition too.

The deficit is also due
To capital goods which we need
And which will certainly help to feed
New exports and our future growth.

But S&P and Moody's both
Will surely move to a down grade
If powerful moves aren't quickly made
To encourage capital flows
Alas! That's the way it goes.

* * *

The fiscal deficit is big
And yet we shouldn't give a fig
If the is growing faster
An identity we should master-
If the product of debt over GDP
And nominal growth, you see,
Is greater than the deficit
The will still be fit.

For debt to deficit will fall
And that's the number that we all
Should be tracking. Is it high?
It's seventy and we'll get by.

And what is more it will fall
Unless we make the stall.

Of course it's always worthwhile ending
What's obviously wasteful spending.

And subsidies clearly count
Over the years the cost will mount.

And fossil fuels should be taxed
Those subsidies must be axed.

I think it's safe to presume
That if we excessively consume
Liquid fuels the global price will rise.

These subsidies aren't green or wise.

But the major reason that we ought
To stop subsidies is that they distort
The market and are inefficient.

Cash transfers are much more efficient.

The way forward we'll clearly see
When every Indian has an ID.

And everyone should be on board
This is something we can afford.

* * *

Let's bear in mind inclusive growth
Is good for rich and poor both.

To get ourselves out of this slump
We really need to prime the pump.

There is no real paucity
We can afford generosity.

And everything the poor spend
Helps us all in the end
And thanks to the multiplier
The economy goes even higher.

The poor can get back on the tracks
With a negative income tax.

Some advantages this scheme can boast-
The very poor get the most,
Cash reaches where it is desired
And no more than is required.

And why I think this scheme is fine
Is that in time costs will decline.

As incomes rise less is paid.

And in good time all those we aid
Will in turn pay their tax
As they get back on the tracks.

* * *

In spite of all the heavy debt
I feel the government should bet
On future growth to bridge the gap.

We should ignore the alleged debt trap.

For India another cause of gloom
Was the global commodity boom.

Why have the prices been increasing?
Some blame the quantitative easing
Or China's steadily rising might
And its unrelenting appetite.

For India this is a cause of pain.

The reason why I will explain.

Many commodities we must import
And last year we did more than we ought.

Supreme Court problems led to more
Imports of coal and iron ore.

This makes the current account deficit
Increase by more than just a bit.

And the commodity price escalation
Then feeds into our high inflation.

* * *

Enter stage left the RBI
Concluding demand is far too high
It merrily raises interest rates.

As expected growth abates
The stock market tumbles down,
Foreign investors start to frown,
Then capital inflows begin to stall
And the Rupee goes into free fall
Reigniting the inflation.

Such is the plight of our nation.

But the commodity boom will soon end
And the Indian economy will then mend.

Metals saw an early fall
And gold has now ceased to enthral
For gold to rise all must buy
The fact it's rising makes it fly
But when smart money does withdraw
Collectively we see the flaw.

Bad weather kept the Ags quite high
But now there's a reason why
The rise has begun to stall
And soon we will see a fall.

A bumper crop is in the making
And prices are on the verge of breaking.

Thanks to the benefits of fracking
The price of gas has started cracking
But oil somehow is still up there
Though I think the chance is fair
That oil will soon begin to tumble
Even if it doesn't crumble.

I think we should understand
That we need this helping hand.

The CAD will naturally decline
And help the Rupee to do fine.

With Rupee strong and prices low
Inflation is then bound to slow.

Don't you think it would be great
If the RBI chose not to wait
And reduced the interest rate
Now and not wait till it's too late.

* * *

Now in a good Agatha Christie
The beginning is always misty
But the dénouement is always clear
But this whodunit is I fear
Somewhat like the Orient Express
Where as usual one has to guess
But the culprit is not one but all
Our case, I think, also does fall
In that unusual category.

In the Orient Express you see
All the suspects plunged the knife,
A gory end to the victim's life.

So too in the case of the growth machine
By careful deduction it is seen
That in this period of great strife
Many culprits plunged the knife.

The global economy's sideways slithering
The government's bungling and blithering.

The RBI's quite rigid stance
The rating agencies looking askance.

The frightening commodity boom
The pervasive sense of gloom and doom.

Will we continue down the slippery slope.

Can we grab onto a glimmer of hope?
The FM did his little bit.

Will the RBI now rise or sit?
Will the global economy mend
Or the commodity boom end?
To revive our Indian growth

* * *

We need at least one if not both.

We know there's many a cause
But whatever the reason for the pause
We shouldn't sit still and merely wait
We can't depend on the economy's fate.

We can always make a bid
For the bottom of the pyramid.

Opportunity can be seen
In making our planet green.

With prices of commodities high
All of us should certainly try
To produce much more here
We should invest without fear.

The economy may seem quite dark
But all we need is a spark.

If we collectively do strive
The economy will revive.

Nadir Godrej
Managing Director, Godrej Industries

First Published: Fri, March 08 2013. 21:38 IST