Finally some good news. The Index of Industrial Production (IIP) grew by some 8% in October, though this was on a low base last year (negative 5%). When the economy is going down, such a strong reversal is not the “expected”, but a significant indicator of a turn-around. Except for mining, which is embroiled in serious political-legal issues, both other components of the IIP – electricity and manufacturing – grew handsomely. Most economists are now saying that the growth may have “bottomed out”; meaning a turn-around is imminent.
Further, the government itself has gone into an overdrive. Starting mid-Sept, there has been a spurt in the government’s decision making. There has also been a huge spurt in the government’s ability to “manage” the political process; be it schmoozing with the two UP rivals who support it externally, or snubbing and defeating political maneuvers of the opposition, including the ever-opposing BJP. By finally cocking a snook at the TMC, and almost forcing it out of the coalition, the UPA finally showed it had its mojo back. It’s not surprising then that the government’s riding a new high. The confidence in the economy is returning. The ratings agencies are responding with a thumbs up. Moody’s has already indicated its approval; S&P may take a little while, but surely it cannot ignore the progress being made.
Parliament has also started functioning (finally), and hopefully the “marshal law” strongly supported by me a couple of days back (Dec 12th: Disrupting Parliament must be made a criminal offence….) will prevent its disruption again in the future. Lined up now are several critical finance bills, passage of which will provide another boost to the economy. The stock market has responded positively to all this by scaling the 19K mark and appearing set to go much beyond. If the Congress can continue playing the SP-BSP game well, I won’t be surprised if the BSE sensex crosses its previous high of 21K before elections in 2014. This could indeed be the most productive period of UPA-2!
What is special now is the kind of support the government is getting in media and with the intellectuals for finally kicking some ass. In India, no one wants to understand the ruling party’s peculiar problems. If it has no majority of its own, it is expected to sew it up (somehow). And while the process of sewing it will itself be criticized, not doing so and causing a policy paralysis will be criticized even more! The cash-for-votes scam is bad, but it is fully redeemed and more by the passage of the Indo-US nuclear deal. Governments are expected to do what it takes; like someone said to me yesterday “a little grease is required to make the machine work! Finally the Congress seems to have figured that out.
If this continues into the next financial year, India will rebound strongly. The newly formed Cabinet Committee on Investments (CCI) should force the Environment ministry into faster approvals and an industry-friendly attitude. If industry complains so much, there has to be an element of truth there. Why is it that it’s only in India that the Environment Ministry has become such a hurdle? There are no such problems in China. All of us like to applaud China, but then when it comes to being pragmatic on environment, our activists start shouting hoarse? India has to balance its interests – and “scheduling” when it will priroritoize environment over development and when it won’t is something we should decide for ourselves; not be driven by over-enthusiastic and often self-serving activists. Without development, a victory on the environment front would be a pyrrhic victory. Both have to go hand in hand. The CCI should now rein in the activist-minister.
Chidambaram appears to have made a huge difference to the government’s working. He has brought in fresh energy; and has managed the political process well. Just imagine – just a few months back, the BJP would not allow him to speak in Parliament! By pressing the right levers, Chidambaram has managed to provide the boost required to push ahead. Hopefully, he will manage to get the RBI to play its role too. Should that happen, there’s no stopping us. We will be back in full swing soon.
In the meantime, bets are being placed on which state will welcome the first Walmart into the country. My money is on Gujarat – especially if Modi wins! If Modi wants the country to focus on his economic growth credentials, he will want to hold this important trophy in his hands; the BJP’s central party can take a walk!
In the meanwhile, there is now a complete divide in the activist’s camp. There is an open war between Anna and Kejriwal. It’s amusing to see Anna accusing Kejriwal of chasing power! Just a few months back, the two were together chiding the existing politicians of that! Kejriwal has – as expected – lost his sting. How much venom-spewing can the usually-happy Indian handle? Enough is enough.
The real truth is that the days of negativity appear to be fading. I am reminded of the iconic Thum’s Up’s slogan: Happy days are here again! Why, even the Indian cricket team is performing better in the 4th test! Things are indeed looking up!