The Congress-led United Progressive Alliance’s Rs 100-crore Bharat Nirman campaign ran into trouble this September. One of its print advertisements featured the same women models in an almost identical frame that was used in the Antyodaya Yojana campaign launched by the BJP-led NDA back in 2000. The two parties apparently hired the same agency. But then, fittingly, the NDA’s Antyodaya scheme was the precursor to the UPA’s Food Security Act too.
Of course, the Left has been telling us for long that the Congress and the BJP are two sides of the same coin. Not particularly money-minded, that’s how communists keep equidistance from both. But even the comrades brand the “twin evils” differently. While the BJP has been predominantly “communal”, the Congress is mostly “dynastic”. Until the Indian National Trade Union Congress (INTUC) and the Bharatiya Mazdoor Sangh (BMS) told us that their parent parties were equally neo-liberal at heart.
In February 2012, 11 central trade unions came together for the first time to call a nationwide strike, demanding minimum wages, permanent jobs for 50 million contract labourers and a full stop to sale of stake in profitable public companies. A year later, this February, the unions went in for a two-day national strike against the antilabour policies of the UPA. “Hours before the strike, the Cabinet subcommittee headed by AK Antony called a meeting just for the sake of it. P Chidambaram did not even attend (the meeting),” INTUC national vice-president R Chandrasekharan slammed his own government.
The run-up to the 2014 General Election promises to keep the economy on the edge. The growth outlook remains volatile as do big-ticket projects, jobs and execution of planned investments. What is worse is that the domestic business mood is at an all-time low. In an exclusive chat with Shaili Chopra, Union Finance Minister P Chidambaram talks on all the issues plaguing the economy. In the particular case of India Inc complaining about a CBI witch-hunt that may be dampening sentiment, Chidambaram is most surprised at the reactions of company owners and CEOs. He believes investigations are taking a normal course and no investor in his/her right mind will abandon the India opportunity in such fear
EDITED EXCERPTS FROM AN INTERVIEW
Are we set to remain stuck as aneconomy in the GDP?
Only after second-quarter results can we make a reasonable estimation of whether the growth will be a notch higher. For about nine quarters, we have seen declining growth, but one hopes that if the second quarter shows growth above 4.4 percent, then we will see the third and fourth improving. There will be an upswing. Point is, are we still on a downslide or is there an uptick? These are not spikes. You don’t have bottoming out of growth and then a straight jump back. Point is, if you are sliding for a long period, one has to see when one reaches the nadir and then whether you climb back.
If industrial growth remains low, then what will trigger this recovery?
In agricultural growth, we will do very well. If we do better, we will produce more than last year, and then it will get reflected in the GDP. That is growth. I’m confident that the growth is visible here and it will multiply and that the economy will revive; there will be an upturn in the second half of this financial year.
The RBI governor may have saved the rupee, but can he revive the industry?
After three years of accelerating decline, the Indian economy has hit a brief pause. Whether this will be a temporary respite or become the springboard for recovery will depend upon what the RBI will do in December. When Raghuram Rajan took office on 3 September, India was looking a foreign exchange crisis in the face. The rupee had depreciated by 10 percent between 2 May and 18 June. The outflow of dollars had turned into a torrent when the US Federal Reserve announced that it would taper off its fiscal stimulus programme. When the RBI raised the effective cost of borrowing by 2 percent to an all-time high of 10.25 percent on 16 July, speculators read this as a sign of panic and redoubled their efforts to profit from the impending fall. On 31 July, commercial banks borrowed Rs 26,500 crore under the Marginal Standing Facility to satisfy their hunger for dollars. As a result, the rupee fell precipitately from 60.05 to the dollar on 15 July to 68.36 on 28 August, a week before Rajan assumed office.
Rajan’s first task, therefore, was to stem the panic. To do this, he lowered the effective borrowing rate to 9.25 percent, thereby easing liquidity conditions in the money market, and simultaneously opened two new windows for NRIs to deposit money in India. These measures, which coincided with early signs that the current account deficit in the balance of payments was likely to fall substantially this year, calmed the money markets. When the US Federal Reserve announced that it would postpone the phase-out of its fiscal stimulus programme, Foreign Institutional Investors began to return, tepidly, to the Indian market. It was, however, NRIs who came to the country’s rescue, bringing in $11 billion in October. By 29 October, when Rajan released the RBI’s second-quarter policy review, the rupee had returned to 60.90 a dollar and the foreign exchange crisis was more or less over.