By Balbir Punj
15th June 2013 08:07 AM
The continuing fall of the rupee against global currencies is symptomatic of the deteriorating health of the Indian economy and the mess the country has got into under the UPA-II dispensation. Opposition parties are not needed to expose the government. Its own data holds the UPA-II to public exposure. And that, too, soon after the PM and the coalition leader and Congress president sought to drum up their government’s nine-year record!
That “record” now includes the rapid deceleration of the economy from a nine per cent growth to below five. Then there is a negative growth of industrial production. The addition of a mere million jobs in such a long period compared to 50 times the number during the six-year NDA regime is yet another indicator of the sad times the country is passing through.
Corporations including PSUs are sitting on a pile of cash and refusing to invest it in the country due to a continuing policy volatility. Big projects are stalled, like the steel plants of POSCO, Tatas, Mittals, the huge aluminium plant of Vedanta that would have lifted the famine-prone Kalahandi in Odisha. These are all among some 1,500 high-value projects stuck in limbo.
Car sales have dipped for the seventh month. Just in last twelve months passenger car production is down by 12 per cent, trucks and buses’ output by minus 11 per cent.
The IT industry that was the showpiece of India is in trouble with most leading companies showing poor results. Even Infosys is so troubled that retired chief mentor N R Narayana Murthy has to be recalled to save the firm. The government’s many promises such as building 20km national highways a day, the railways’ projection of 1,000km addition a year, the expansion of ports, remain unfulfilled.
The entire country is facing extensive power cuts. The incapability of the government in putting the power sector on the fast-track mode is exposed. Despite power cuts and a huge gap between demand and supply, the national power exchange says the price of electricity is too low to be economic for power generation companies. Several foreign power companies that were once bidding for Indian power projects are winding up India operations or slowing them.
All this means Rahul Gandhi acolyte Jyotiraditya Scindia, the power minister, is at sixes and sevens over the sector. There is failure written large on every wall of the government. And Manish Tewari’s several hundred crore advertisement drive to lift UPA’s face through newspapers is like the crow posing as a peacock!
Despite government spokesmen trying to convince us that the slide of the rupee is a temporary phenomenon, the global speculation over the impending financial changes in the US, the data speak a different language. Between January 2003 and June 2013 the rupee has slid from 46.69 to a dollar to 58.39.
On the eve of the UPA-II’s fourth anniversary the inflation figures were down and the government was announcing the near end of a seven-year-long inflation that had at its peak crossed double digits. After the slide in rupee, despite a fall in global oil and commodity prices, the ghost of the hydra-headed inflation is back to haunt a people already crushed under rising prices, fewer jobs and corruption at every step.
There is a feverish attempt by the government to prevent a complete collapse of business confidence in the economy as the rupee slides. Chief economic adviser Raghuram Rajan has come to reassure industry that the government, RBI and market regulator SEBI are monitoring developments and will take action as “warranted”.
But his boss, finance minister P Chidambaram, has been promising “reforms” for well over a year while FIIs are withdrawing from India investments and even Indian corporates are hesitating to invest their cash pile. The last hope is in floating foreign bonds and NRI sovereign bonds.
The investors are not dumb and are reading the signs on the Dalal Street walls. The government’s dollar bonds, with or without sovereign guarantee, will not fetch an extra million dollar when no one takes its promises and assurances seriously, not even PSUs.
So the UPA is going wild and targeting windmills in an effort to show itself as the knight savior. The most recent windmill is the gold import. Instead of recognising that Indians are buying gold right and left because they have lost faith in the government’s management of the economy, facing job loss and double-digit inflation, etc. for long, the Congress-led regime seeks to curb gold demand by rising taxes on import.
Recently import duty on gold was raised from six to eight per cent. But despite gold prices falling, the imports are rising and the government is pleading with the banks to stop supporting gold loans! Surely this is the proverbial Spanish character imagining tilting at windmills.
All these raises the fundamental question — how can the public trust a government that is bleeding the economy through corruption day after day. Even as the PM was protesting innocence when the highest court in the land came down heavily on the law minister who had to quit. Then came the picture of the railway minister caught in a railway job-for-cash scandal.
As if this is not enough, only the other day the CBI has filed an FIR against a Congress MP Navin Jindal for indirectly bribing a Congress former MoS, Dasuri Narayan Rao, in charge of coal, for getting coal allocation through falsifying facts. More importantly, during the allocations, the cabinet-level minister for coal was the prime minister himself.
The Coalgate is now wide open as the worst scandal of this government of many scandals. No wonder the then law minister was too curious to whitewash the CBI report to the apex court on the scandal and the prime minister was so eager in protecting him.
So it is not the rupee that is falling. There is pessimism and gloom all over. The Congress-led UPA-II government has forfeited the confidence of the people, the business and the investors. The origins of the current multi-faceted crisis gripping the country are in the weird arrangement under which the UPA functions.
The money is collected from the taxpayers by the government machinery led by Manmohan Singh. And its disbursal is decided by the National Advisory Council, headed by Sonia Gandhi. The country is paying a heavy price for this distortion in the system.
Balbir Punj is National Vice President, BJP.
E-mail: punjbalbir@gmail.com
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