Nobody is speaking for middle-class taxpayers anymore. Rupee is falling, markets sinking

Many who were so worried about the decline in the rupee over a decade ago are unwilling to speak up. They were tigers when Manmohan Singh was in charge. Now they are mice.

Image for representation | Photo: (c) Copyright Thomson Reuters 2024

Have you been following the troubles of the Indian rupee, which has crashed to historic lows over the last few days? Those of you with long memories will remember that the last time this happened, there was an almighty ruckus.

At a rally in 2014, a top opposition politician declared: “Our country’s rupee is falling. The value of the rupee is continuously falling. During Atalji’s government, the rupee was at 40-45 to the dollar. And under this government, it has kept falling: 62, 65, 70…”

No prizes for guessing that the opposition politician in question was Narendra Modi, then chief minister of Gujarat.

The rupee became a particular obsession of his. The year before, he had said: “The rupee is in the hospital and has been admitted to the ICU. The government has told us that in two months the rupee will become stronger. But did it? They are unable to do so. They have lost control of the country.”

He kept at it: “While the rupee has been falling the government has not done anything about it. Once the rupee keeps falling, world powers take advantage of it.”

But why single out the future prime minister of India? The anger and outrage spread across society. Even movie stars got in on the act.

“Dollar on an escalator. Rupee on a ventilator. Nation in ICU. We are in coma,” tweeted the noted economist Shilpa Shetty. Added Juhi Chawla, “The only way the rupee can save itself is by tying a rakhi on the dollar.”

Even the great Amitabh Bachchan tried to make a little joke: “New word added to English dictionary: RUPEED (ru-pee-d), VERB meaning: move downward…”

I am picking only a few examples of the brave and outspoken statements made by our stars when Manmohan Singh was prime minister because they have not said anything like this, have not even tried to make the same little jokes, in the decade since the BJP came to power.

Tigers under Manmohan, mice under Modi?

As with nearly everything in India, there are many sides to the story. At one level, the prime minister-to-be was right. The fall of the rupee was swift and disturbing. And the movie stars had a perfect right to be dismayed and to make abortive stabs at humour.

Explanations were offered by the Manmohan Singh government: there was a global economic slump, it was wrong to look only at dollar-rupee parity, and so on. It hardly mattered. Nobody paid any attention. We knew that, no matter what the government might say, the reality was that the rupee in our pockets was now worth less than it had been a few months before.

At that stage, the rupee was 64 to the dollar. We were given to understand that when the government changed, the rupee would rise again—perhaps even to the value it had held during the Vajpayee government, the rate so approvingly quoted by Narendra Modi.

Supporters of the BJP made much of this. Even Sri Sri Ravi Shankar earned himself lasting notoriety with his sycophantic tweet about how the rupee would rise once Modi became prime minister.

As we all know, this did not happen.

At present, as I write this column, the rupee has crossed 86 to the dollar. There is no guarantee that it will not fall further; some experts are talking about a rate of 90 to the dollar.

It is not my case that this is all the government’s fault. And perhaps there are advantages to a falling rupee in terms of competitive advantages for our exports. Certainly, any Indian politician or industrialist who has money stashed away abroad has made a fortune in rupee terms. NRIs have seen the rupee value of their net worth increase.

But two things intrigue me. One: is it too much to expect a degree of consistency from politicians? When exactly the same thing happened at the end of Manmohan Singh’s second term, it was treated as a national calamity. Narendra Modi himself told us how foreign powers could now take advantage of us.

Given that the rupee has plummeted to an even lower level—an all-time low, in fact—and is now worth much less than it was under Manmohan Singh, are we not entitled to some kind of explanation or a little reassurance from the government? Or even an acknowledgment that a promise made again and again in 2013 has not been kept?

And second: where is the public outrage now? The film stars who were so brave and vocal in 2013 are all strangely silent today. Many other well-known people who were so worried about the decline in the rupee over a decade ago are unwilling to speak up when there is a complete collapse.

The conspiracy theory view would be that stars and celebrities are too scared to say anything that reflects badly on this government. They were tigers when Manmohan Singh was in charge. Now they are mice.

Perhaps there is something to that explanation. But let’s go beyond celebrities. Have we seen anything like the media outrage that accompanied the 2013 decline in the rupee?

These days, the collapse of the rupee hardly ever makes it to page one of the newspapers. No self-righteous anchor huffs and puffs about it every evening.

Why the double standard? Well, your guess is as good as mine.

But it all goes further and deeper.

The 2 per cent with 0 clout

After years of providing middle-class people with a safe place for their savings, the stock market has now become a dangerous and unpredictable place. It has yet to recover to the levels it was at only a few months ago.

Is this because of the taxation measures announced in the last Budget which, it was predicted, would yield exactly this effect? Or is it that foreign investors find the Indian market less attractive now and are pulling their money out, a development that affects both the exchange rate and the Sensex?

There are economists who are better placed to answer these questions than I am. But the question about consistency is simple enough: why is it okay for this government to do exactly what it attacked the Manmohan Singh government for doing?

And finally, to repeat a point I have made several times before in this column: nobody cares about the middle class. The middle class are the people who worry about how the rupee has collapsed and the stock market has slumped. Even the media, which is drawn from the same class, has nothing to say. And politicians across parties do not speak up for middle-class concerns because they do not want to be seen as pro-rich. (Ironically, when the same politicians speak up for the super-rich, they claim they are pro-growth and not pro-rich.)

Another obvious feature of the neglect of middle-class concerns is the income tax structure. Only around 2 per cent of the Indian population pays income tax. The majority of the people who pay the tax are drawn from the middle class, many of them salaried employees who lack the means that some businesspeople possess to conceal their real incomes. Corporate tax, collected from profitable companies, yields the government much less revenue than personal income tax. In which world can this be considered fair?

But that 2 per cent number speaks for itself. There are too few middle-class people to make a great difference at elections. They don’t matter to politicians. And unlike the super-rich, they can’t pay bribes or contribute to election campaigns.

So how does it matter if the value of the rupee erodes or if the market falls? Or if an alarmingly large chunk of middle-class incomes ends up in the hands of the taxman?

Once upon a time, the media would have spoken up for the middle-class taxpayer. Today even that is asking for too much.

Vir Sanghvi is a print and television journalist, and talk show host. He tweets @virsanghvi. Views are personal.

(Edited by Asavari Singh)