Great Expectations

Great Expectations


There is a poignancy about a long cherished dream beginning to come true. The wait itself does strange things as blue turns to grey. Over the time it takes, one struggles to retain the original pure impulse. But, as the chips fall into place, there is an odd sense of bewilderment, because, along with the longed for entitlements coming to fruition, there is a strangely pyrrhic feeling. And the reciprocal demands begin almost at once. Manifold demands in fact, that represent new burdens of responsibility.

Nobel Laureate and Welfare Economist Amartya Sen lays out some prerequisites to the growth path. He says much, more in import than the words he uses, his tone modulated to be as kindly as he can make it.

In context of the ongoing global recession which offers opportunities for India, Dr. Sen hopes that we will begin to do more about our responsibilities to the world at large. He says that once, right at the start, just after independence, we were championing the causes of the underdeveloped world. That idealistic commitment, to a resurgent post-colonial world and non-alignment proved untenable in the long run, and has rightly faded from public policy.

Today, India and the world is brutalised by Islamic terror. But some say the causes of Islamic terror too lie in the obtuseness of the feudals and oligarchs, undemocratically hogging the show for themselves at the expense of illiterate hordes. And this particularly, in countries, now radicalised, such as Afghanistan, Pakistan, Iran, Sudan, and just under the iron-fisted façade of being the stable Guardian of Holy Mecca, Saudi Arabia.

In India too there is much sloganeering about poverty and inequality, particularly at election time, but deep economic and social inequities do persist even 60 years on, and we need to address them. The list of the aggrieved is long. There are Islamists, Maoists, other minorities and their grievances, gender issues, caste, environment, poverty, education, health, infrastructure, water, power, food--all these things and others more numerous.

We, in India, must meet our obligations to ourselves and to the world. A blinkered and selective rendering will not sustain. And this is not just because of, or in exchange for, the global prominence we seek, but to be essentially counted for more than just the potential size of our market! We need to be counted, says Dr. Sen, as a civilised, progressive country that cares for all its people and also about the issues that threaten mankind.

Nevertheless, our elevation is beckoning. Prime Minister Manmohan Singh, recently recovered from heart surgery, knows this only too well. He has been asking his doctors whether he would be able to go to the G-20 Summit, scheduled for the 2nd of April, in London, and not, you will notice, on the first.

In the host country, Great Britain’s Prime Minister Gordon Brown, is eagerly awaiting economist Dr. Singh. This G-20 summit comes at a crucial juncture when the world economy, as put by the “sage of Omaha” Warren Buffet, is “falling off a cliff”.

Talking of cliffs, dark-haired and Scottish, the sometimes dour Gordon Brown is likened, somewhat unfairly, to a moody Heathcliff from Wuthering Heights. Moody or not, Mr.Brown, as UK’s former Chancellor of the Exchequer, knows his economics too. He knows that much of a longed for early recovery could depend on China and India.

China continues to put in the life-saving money, billions of its dollars in reserves, into US Government Treasury Bonds. And it is this Chinese money injection that is shoring up the greenback even as the Obama administration is undertaking the greatest fiscal deficit fuelled bailout in US history.

But China’s exports to the US and Europe which principally accounted for its spectacular double digit GDP growth, is sharply down. The challenge now is to simultaneously stimulate domestic demand in China, mainly by huge infrastructure based spending, to take up the slack.

India has a complementary story because it does not have more than 12 per cent of its economy dependant on exports. But even as it continues to grow, it does not have the money to execute a fiscal stimulus of the size necessary to properly boost its own and the global economy.

Left to its own devices, India will limp through the coming year, till hoped for global revival comes to its rescue. On its own, there is little to expect from a considerably weakened, almost deflationary economic environment. There is not enough oil in Indian lamps to blaze our own way out of the darkness, let alone shine a light on the shadows of the global recession. Unless, that is, the G-8, with its great capacity to print notes without going under, agrees to vastly boost the kitty of the international lending agencies.

India has already called for the International Monetary Fund (IMF) fund pile to be enhanced from $250 to $500 billion a year. Similarly enhanced funds need to go to the World Bank (WB) too. The Asian Development Bank (ADB) needs, in our estimate, at least 200 per cent more in funds to leverage its own developmental lending power.

India traditionally borrows heavily, at preferential rates, from these and similar funding agencies for her woefully backlogged infrastructure development. At one, more protectionist time, it was different, but now, there is no way we can hope to climb back to near or double-digit growth without getting rid of our infrastructural bottlenecks.

There are similar issues, both financial and technological, connected with India’s inadequate defence and security preparedness too. And even as our appetite for defence equipment is amongst the highest in the world, we have been stalled in many areas due to restrictions and inimical sanctions imposed on us.

These are now largely gone because of the recently signed nuclear power deal with the global community and the US. We now have access to much valuable and enabling dual-use technology. This can boost the speed and capabilities of our indigenous defence industry and aid outright purchases too.

Defence, Agriculture, Water Management, Infrastructure Development, Management Practices--all this can go forward better and faster with more international and private sector participation. It may seem like a typical “spend to save” Keynesian prescription. But for once, the “Great Expectations” from the forthcoming G-20 Summit are animating all at an almost Arthurian round table.

(1,052 words)

Friday, 13th March, 2009
Gautam Mukherjee


Published in The Pioneer as the Op-Ed Page Leader entitled "Economy falling off a cliff" on 24th March 2009. Also published online at www.dailypioneer.com and archived under Columnists.