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2010: Hopes and Fears

Omkar Goswami


Dear Reader

By the time you read this piece, you will have started to wind down the year. With Christmas on a Friday, the long weekend starts from the evening of Thursday. If you are young, single, or a DINK (double income no kids), the holidays will probably start with a boozy party on Christmas eve and another during the weekend, after you’ve recovered from the first. If you are older, its holiday time with the family — evenings of being together, watching movies, going for walks and, if you’ve planned things well, a holiday away from your city that ends on Monday, 4 January 2010..

In such lovely ‘enjoy—play—chill’ circumstances, why do I have a title with the word ‘fears’? We dealt with 2009 pretty well. We shrugged aside the global meltdown to grow our GDP by over 6 per cent in 2008-09. We are all set to hit between 6.7 per cent and 7 per cent in 2009-10. As my friend Rajeev Malik from Macquarie Securities recently wrote after a visit to India, “The economy feels more like 2004 than 2008, i.e., at the start of an upturn rather than at the peak... 2010 will be all about the return of private spending, including urban consumption and corporate capex. Indeed, credit and investment upturns should gain more traction in 2010.” These are exactly the sentiments that I hear from friends in the corporate and banking world. India is on a roll once again.

So, despite the spurt in food prices, there is every reason to be hopeful. I would be surprised if we don’t reach the 8 per cent GDP growth mark in 2010-11. Corporate capex should rise substantially. I expect a respectable surge foreign capital inflows — both FII and FDI. The job market will pick up, and at a brisk clip over the second half. The joker in the pack is inflation: not only food, but also oil, gas and commodities. Overall, however, it looks as if we amidst a B.B. King song, “Get together and let the good times roll”.

Why then the fears? Is it that I’m getting older becoming a curmudgeon who searches for grey clouds in a radiantly blue sky? I wish this was it. In fairness, the fears are much more to do with India than my idiosyncratic aberrations.

I worry on three counts. The first is the divide between the increasingly well off and 300 million of the country’s very poor — which also shows up in vast differences in incomes and opportunities between the north, west and south of the country, and the centre, east and north-east. I have written on this earlier. Income and consumption inequalities are increasing significantly in urban and rural India, as well between the two. So, too, inequalities in entitlements and opportunities. The political and moral economy of a democracy like ours won’t tolerate this. Without substantive, consistent and meaningful anti-poverty programmes, you can be sure of one of two things. Either voting in netas of the lowest common denominator because they will claim to better the political and economic lot of the wretched; or, being taken over by the Maoists.

That’s my second worry. The Maoist threat is significant, and spread across most districts of Bihar, all of Jharkhand, all of Chhattisgarh, a few districts of Maharashtra, parts of Andhra Pradesh and Orissa, and some districts of West Bengal. Maoist insurgency has prospered because of poor state and district-level governance; because mass poverty offers only two options: to accept fate, or to combine and pillage the rich; and because guns create lives of their own. The problem with gun-toting, machete-wielding Maoists is that you don’t get far by just negotiating. You have to kill the leaders ruthlessly; administer fairly and fearlessly; and deliver programmes for the poor. The terrible quality of police and district level administration can’t deliver the triad — not even one of three. There lies the rub.

My third worry relates to Pakistan’s major export to India: terrorism. For all the good that Mr. Chidambaram has done as the Home Minister, I find it hard to believe that India can immunise itself from another major terrorist attack. There is nothing to suggest that the cops and local administration in Delhi, Mumbai, Bangalore, Hyderabad, Chennai, Kolkata, Jaipur or Ahmadabad have systems in place to regularly get good prior information; to coordinate with other agencies; and to counteract rapidly, with high impact and extreme force. Underpaid and overweight cops are good at harassing motorcyclists, thelawallas, vendors and shop-keepers; not at working as a crack team to kill terrorists. Who know this only too well.

So, as we move to 2010, there is much to hope for. And some to fear. May the hopes triumph; and the causes of fear disappear. Happy New Year.


Published: Business World, December 2009


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