Prisoners of Xanadu

Since 2009, UPA-2 has proceeded on the assumption that the India story is divinely ordained; all it has to do is manage the spoils of growth

Among the more curious features of public life in this country is the disinclination of subordinates to pass on bad news to the boss.

This stems from our natural inclination for flattery and a tendency to equate the messenger with the message.
In the 1960s, the generals gave the Prime Minister a misleading picture of our defence preparedness along India’s eastern borders; in 1977, intelligence agencies painted Indira Gandhi a very rosy picture of the public responses to the Emergency; and earlier this year, self-serving Congress apparatchiks and participatory psephologists told Rahul Gandhi that he was taking Uttar Pradesh by storm. This week, after repeating ad nauseam that India would have a normal monsoon, the meteorological department (whose job is to provide accurate forecasts and not manage the economy) has grudgingly admitted that the rains are proving a bit disappointing but that it will be all right in the end.
A Churchillian determination to talk up national morale in times of war is understandable, and even commendable. However, its indiscriminate use, as recent events in India show, can be woefully counter-productive. Throughout this year, the government has been in denial over the state of the economy, pretending like in the film 3 Idiots that “all is well” and that only the envious are making awkward noises.
In January this year, Montek Singh Ahluwalia, who, apart from being the deputy chairman of the Planning Commission, also doubles up as the government’s chief pundit on economics, was telling gullible Indians that “the current downturn in economic growth due to developments in euro zone, had bottomed out”, that the “economy was on its way back to the high growth trajectory as the inflation was subsiding and the rupee stabilising against the dollar.”
Nearly five months later, on June 11, reacting to a Standard & Poor’s report suggesting that India could soon become a “fallen angel” unless the government woke up to its obligations, finance minister Pranab Mukherjee said that the ratings agency had got it all wrong. India, he asserted on a day when statistics recorded the country’s industrial production to be stagnant, was actually poised for a dramatic “turnaround” in 2012-13. All that India needed to get back to the nine per cent growth on which the Planning Commission is apparently basing its 12th Five-Year Plan calculations, was to hold its breath, undertake a modest austerity regime and pray that Greece doesn’t go bankrupt. To drive home the new purposefulness, Prime Minister Manmohan Singh even held a proverbial “high-powered” meeting of ministers last week and, like a hard taskmaster, set targets that must be achieved.
The fact that in just two years India has made a transition from being the flavour of the season to a point where investments in the country are on the verge of being viewed as “speculative” is nothing short of remarkable. The question naturally arises: did the government not read the writing on the wall? If there is now a sudden flurry of activity to remove infrastructural bottlenecks, why was this not done earlier?
The answers, as the S&P report rightly notes, are almost entirely political. Ever since it was re-elected in 2009, the UPA-2 has proceeded on the specious assumption that the India story is divinely ordained, and that it fell on the government to merely manage the spoils of growth. It was this smugness that was responsible for the 2G fiasco, the scandals over the Commonwealth Games and the preoccupation with creating a network of entitlements aimed at ensuring repeated re-election. The implications of individual ministers doing their own thing and the regression into a complex regime of labyrinthine controls were overlooked. The government went into a denial mode, blotting out the bad news.
It would be no exaggeration to suggest that until the precipitate slide in the value of the rupee earlier this summer and the grim data of industrial stagnation, the political class as a whole was blissfully unaware of the magnitude of the economic crisis. It was assumed that the real problem was inflation. Once that beast had been tamed — as the government was insistent it would — things would be hunky-dory once again. It is interesting that the issues which agitated the Congress until a few months ago was the career of Mr Gandhi, the proposed legislation on land acquisition, the sub-quota for minorities and the proposed Food Security Bill which would upstage the MNREGA as the new magic wand of electoral success. The report card released by the UPA-2 on its third anniversary dinner last month still spoke in terms of India being one of the world’s fastest growing economies. The issues raised by the S&P report were neither mentioned nor addressed. The regime had become a prisoner of its own make-believe world.
The move from denial to disaster management is always difficult to manage. In times of adversity, the Congress has responded in two familiar ways: by either retreating into despondency (as P.V. Narasimha Rao did in the run-up to the 1996 election) or falling back on shrillness (as Indira Gandhi did in 1975 and Rajiv Gandhi attempted to do in 1988-89). Dr Singh is temperamentally more inclined to following the course set by Rao but he doesn’t control a party that is itching to rediscover the “destabilisation” rhetoric. Consequently, India must brace itself for at least two years of cacophonic drift.

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