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
