When former Finance Minister P. Chidambaram was being taken to prison Thursday after a CBI court rejected his bail petition in a money laundering case, a reporter asked him, “Are you not worried (that you are) going to Tihar Jail?” The veteran economist and politician’s instant response was, “I am more worried about our economy!”
It echoed the concerns he had flagged in his speech on the Union Budget in the Rajya Sabha in July. According to Chidambaram, an “opaque” and “insipid” Budget not taking into account the seriousness of the economic crisis was extremely alarming.
Almost every day, there are reports about India’s economy heading towards a dangerous recession, about automobile factories and showrooms shutting down, about falling rupee and tumbling stock market and declining export. And all the Narendra Modi government could do is dip into the central bank’s reserves to borrow ₹1.76 lakh crore because it can’t manage the country’s fiscal deficit any other way.
And yet the dedicated supporters of Narendra Modi and the BJP say there is ‘nothing to worry’, that this slowdown (which many don’t even acknowledge) is ‘cyclical’, that soon the economy will recover. Their response to every news story on the failing economy is to accuse the media of ‘spreading panic’. It is this complacency, this smugness that is more worrisome. The attempt to divert attention through headline management just never ends.
Chidambaram was only highlighting this concern when he was on his way to Tihar Jail. The former Union minister can’t secure a bail because he isn’t Salman Khan, who flies kites with Modi.
But Chidambaram isn’t the only one concerned. Former Prime Minister Manmohan Singh too expressed his anguish a few days ago when he almost implored the Modi government to listen to sane voices and do something about the economy. In his statement listing out all that ails the country’s economy today, Singh sharply criticised Modi government’s mindless actions like demonetisation and the hastily implemented GST that have deepened the crisis. But he has been reviled so much in the last eight years or so that Modi and his ministers just won’t take his advice seriously – nor will BJP supporters see reason and force the government into action.
In addition to the economic woes, the situation in Assam after the disastrous exercise to update the National Register of Citizens and the unpredictable future of Jammu and Kashmir are just promos of the anarchy that lies ahead. The Modi-Shah regime is only three months old, and the remaining 57 months are not going to be easy for everyone involved.
Also read: The economy is India’s most potent weapon, but it’s losing its power
It’s always the economy, stupid
No analogy will explain India’s current economic and political scenario blow-by-blow. But the United States of 1992 and the presidential election campaign that year hold out some similarities. Democrat candidate Bill Clinton was critical of the economic mismanagement by the incumbent President George H.W. Bush, after all, “It is the economy, stupid!”
Similar to the Modi government today, the Bush administration seeking a second term was on cloud nine. The Berlin Wall had fallen in 1989, the US had achieved a sensational victory in the Gulf War, and the collapse of the Soviet Union in 1991 had ended the Cold War. The opinion polls were spectacularly in favour of the Republicans (who previously had been in power for two more terms under Ronald Reagan). Clinton was an unknown figure from the “nondescript” state of Arkansas. And yet, all those high popularity ratings for Bush didn’t work for him in the elections and Clinton romped home to a massive victory.
The frenzy that we are witnessing over the abrogation of Article 370, and the “liberation” of Kashmir from dynastic politics, is akin to the jingoism that existed in the US then. The unprecedented second term that Narendra Modi won this year, with his aide Amit Shah planning the so-called ‘legendary’ strategies, have generated a similar heightened jingoism across the country.
And just like the Democratic Party in the US then, the Indian National Congress today looks confused and defeatist.
Also read: Nirmala Sitharaman must stop stonewalling questions on slowdown. Denial mode isn’t an option
Lessons from history
It is no one’s argument that the Congress will emerge victorious like the Democrats in the assembly elections that will be held over the next two years. But that does not mean the political strategising and loud victory drums will help the Modi government push all the concerns and debates over the economy under the carpet. It should recall how the Congress was unable to draw much political mileage either from the victory in the 1965 war with Pakistan or from the liberation of Bangladesh in 1971. The economic crisis of 1966 could not be contained by the so-called ‘magic’ of Jawaharlal Nehru’s legacy (he had passed away two years ago in 1964) nor by Lal Bahadur Shastri’s leadership. In the 1967 election, Indira Gandhi lost as many as eight states because it was impossible for the masses to ignore the devalued rupee, the recession, the massive industrial strikes.
Similarly, the Bangladesh victory in 1971 could not control the political anarchy, which had roots in the turbulent economic situation. The huge rise in the crude oil price following the 1967 Arab-Israeli War (or the Six-Day War), the 1972 drought, the famine that even caused food riots in some parts of the country, the rural distress, the growing unemployment, the ethnic and linguistic riots all added to it. This discontent led to Jayaprakash Narayan’s movement, which managed to dent Indira Gandhi’s charisma to an extent. When her popular appeal began to fade, she took the recourse of measures like the Emergency. One of her objectives was to bring the economy on the rails.
The economic crisis that forced the Indian government to pledge 47-tonne gold to the Bank of England in 1990 can be considered as near equivalent that has made the RBI transfer its surplus of Rs 1.76 lakh crore to the Modi government now. The economic crisis of 1989-90 led to complex political uncertainty, which led to yet another mid-term election in 1991. (Rajiv Gandhi was killed during the election campaign.)
If it wasn’t for the major economic liberalisation and reform measures undertaken by then- Finance Minister Manmohan Singh, under the government of P.V. Narasimha Rao, the situation could not have been brought under control. Not only the gold that was sent to the UK came back, but a new era began and an aspirational middle-class emerged.
Ironically, the IT revolution that was kickstarted by the policies of Rajiv Gandhi gave rise to a new NRI community that is now all cheers for Modi and has no memory of the man who ushered the revolution.
Also read: Slow economic growth is both immoral and anti-national. Don’t ignore falling GDP rate
Anarchy ahead
Politics cannot be delinked from economics. It is political economy that defines stability and development. And if the economy is mismanaged or driven by populist and patriotic jingoism, then it inevitably will lead to chaos and political disorder. One does not need a JP to channelise brewing discontent among the citizens. It will gain its own momentum.
The author is a former editor and Congress member of Rajya Sabha. Views are personal.