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T N Ninan: The bigger problem

While corruption is both an important and an urgent issue, the country should be giving more thought to the evolving economic situation

T N Ninan  |  New Delhi 

The government deserves every bit of the stick it has been getting on the corruption issue. First it allowed ministers and others to run amok and swindle thousands of crores of rupees, then it refused to take action until its hand was forced, tried to shoot those holding up a candle to the misdeeds (the Comptroller and Auditor General or CAG, the media, judges, and of course Anna Hazare), suggested dark conspiracies against the country, and served up a Lok Pal Bill that did not measure up. Even now, it seems to have no conviction in the steps it is taking to deal with the widespread public outrage. Sheila Dikshit is allowed to brazen it out after the CAG has indicted her and her government on the Commonwealth Games, even as other scandals wait to get their share of attention — like the manner in which bilateral aviation rights were handed out to West Asian and other airlines when Praful Patel was civil aviation minister. So while it is true that Anna Hazare is stubborn to the point of unreasonableness on some contentious issues regarding the Lok Pal Bill, and may even be an unintended stalking horse for the Rashtriya Swayamsevak Sangh, the government gets no purchase when it makes even reasonable points. Think credibility gap — for which the government has only itself to blame.

But while corruption is both an important and an urgent issue, the country should be giving more thought to the evolving economic situation, which is certainly more important and is becoming more urgent as well. The worries about where the leading western economies are headed have reached new levels this past week, with talk of banks catching a virus — and reviving fears of a 2008 reprise. The stock markets have tanked in every country, and the Sensex is where it was four years ago. Unlike then, it is now on its way down. While the usual tools of market analysis suggest that this is now a bear market, we have the unusual sight of US treasury yields reaching 40-year lows, the opposite of what might have been expected after Standard & Poor’s knocked it off its AAA perch. If money is heading for safe hiding places even if they are less safe than before, or going for gold, the message to absorb is the underlying nervousness about all other markets.

India is not an island. Growth forecasts for the current year have started slipping below eight per cent, with some going down to seven per cent. The next five-year plan target, says a Reserve Bank deputy governor, should be lowered to eight per cent (lower than the average for the last eight years). The old bombast about double-digit growth now belongs to some other planet, and the official talk of nine to 9.5 per cent growth too is history. Meanwhile inflation has become so endemic that 9.2 per cent is hailed as moderation! The government is trying to combat the charge of policy paralysis, but this Parliament session too may pass with little legislative work getting done.

A potentially dangerous global scenario combined with a loss of confidence at home means that the future may not be more of the past. Yet, it is growth that has kept the system humming, and social tensions under a lid, while providing the means for government handouts to the poor. The Swiss talk of a “magical hexagon”, comprising six policy objectives: good growth, low inflation, balanced books, a clean environment, full employment and social cohesion. Of those six, India so far has been able to claim real success on only one, namely growth. Take that away, and the country may be on slippery ground.

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First Published: Sat, August 20 2011. 00:59 IST