Respected Finance Minister

Who knows what tomorrow may bring for you? Apparently well networked ‘knowledgeable’ folks of New Delhi — and there are many who claim to be so, as they invariably must — are unanimously asserting that you are a shoo-in to being the tenant of a very large palace and, thus, to what must be the most boring job in India. There are perks, no doubt: official banquets, innumerable liveried chaps scurrying everywhere, a personal plane for many free trips to wondrous far off lands, working on perfecting the salute and learning how to look serious while reciting boring, often untrue, speeches of the government on all important occasions.

Is that what you really want? A job that you will happily and graciously accept as the final ‘pinnacle’ of your long career? Worked long enough, and now it is time to chill?

I don’t know you, so I can hardly be sure. But something tells me that sitting as an ornate constitutional head is not you. It may be true that the job that you might have really wanted is not to be had. But I can’t believe that being Smt. Pratibha Patil’s successor is a worthy second prize for a person who is known to be the hardest working, multi-tasking minister as well as the most networked and respected politician within the United Progressive Alliance. By a long shot.

Besides, even if you secretly desire the post, may I humbly suggest that the nation cannot afford to have to ‘promoted’ to the Rashtrapati Bhavan? Here is brief résumé of our various ills — all of which seem to have come together to create a perfect storm.

• India has witnessed eight successive quarters of declining GDP growth — from 9.4 per cent in January-March 2010 to 6.1 per cent in October-December 2011. On an annual basis, GDP growth has fallen 1.5 percentage points from 8.4 per cent in 2010-11 to 6.9 per cent in 2011-12.
• The Twelfth Five Year Plan Approach Paper says that 9 per cent growth needs gross fixed capital formation (GFCF) at no less than 33.5 per cent of GDP. Unfortunately, GFCF has fallen to 30 per cent of GDP in October-December 2011. Growth in GFCF, compared to the same quarter of the previous year, has dropped from 11.1 per cent in October-December 2010 to -4 per cent in July-September 2011 and then to -1.2 per cent in October-December 2011.
• As you are well aware, the fiscal deficit has burgeoned to unsustainable levels. For 2011-12, the central government’s fiscal deficit stood at 5.9 per cent of GDP. Add to that 3.1 per cent on account of the states and other ‘below line’ items, and the consolidated deficit climbs to 9 per cent of GDP — almost as bad as in 1990-91.
• Wholesale price inflation had reduced between September 2011 and January 2012. Unfortunately, it has reversed, and creeping up yet again. This, coupled with a large budget deficit, bodes poorly for a softer interest rate regime.
• The current account deficit now stands at 4 per cent of GDP. Not surprisingly, therefore, between April 2011 and mid-May 2012, the rupee has depreciated by almost 24 per cent against the US dollar — more than any other significant currency in the world.
• The energy situation is grim: thermal power plants don’t get coal, and gas based plants don’t get gas. There is hardly any increase in coal production. Telecoms are in a mess. The less said about railways the better. Mines have shut down. The list of negatives is huge. And truly alarming.
• As if that were not enough, we will soon see another crisis with Greece exiting the Euro Zone, whose shock waves will spread everywhere.

It is more than a perfect storm. It is mother of all typhoons. Much of it of our own making.

As a young boy, you must have read and recited a poem by Felicia Dorothea Hemans called Casabianca: “The boy stood on the burning deck / Whence all but he had fled; / The flame that lit the battle’s wreck / Shone round him o’er the dead.” Need I remind you that at 76 years, you are like India’s Casabianca? This is no time for you to leave North Block and the innumerable Group of Minister meets that you chair to breathe fresh air at the top of the hill.

We don’t know whether India can fix herself. But we do know that if there is a person who could douse the fires of a burning ship and again set course it is you. You have a year before electoral compulsions call.

So, give Rashtrapati Bhavan a miss. Instead, fix the nation — which will be far more grateful to a minister who can solve its serious problems than a President who recites the government’s prepared speeches.
 
    
Published: Business World, May 2012