I am happy to be back in this space and begin a conversation.
Before and during the elections to the Lok Sabha, we were concerned
with the state of the economy. After the elections, and seven months
after a new Government assumed office, those concerns have not gone
away. Rather, new questions concerning the economy and the polity are
being raised every day.
In the middle of 2013, the economy was on the mend. Then, Mr Ben
Bernanke struck with a thoughtless remark on withdrawing from
‘quantitative easing’, when that step was several months away.
Nevertheless, the government of the day gamely stuck to the target of
fiscal deficit, contained the current account deficit, allocated money
for public investment and key social sector programmes, and promised
that economic growth would revive in 2014-15.
Calendar 2014 can be divided nearly equally between the UPA
government and the NDA government. Luckily, therefore, we do not have to
apportion blame or deny credit.
THE ECONOMY
One year ago, growth was faltering and the financial year ended with
an unsatisfactory 4.7 per cent. Today, after 5.7 per cent and 5.3 per
cent in Q1 and Q2 of 2014-15, there is still no assurance of revival.
At the end of November 2013, year on year non-food credit growth was
14.7 per cent; at the end of November 2014 it was just 11 per cent .
The decline in the rate of inflation began in November 2013 (see graph)
when the UPA was in office. Thirteen months later, the decline
continues, accelerated by the fall in the price of crude oil, a
windfall for the NDA.
Last year, at this time, the price of Brent crude oil was around USD
99 per barrel. This year it is around USD 53 per barrel, and falling.
Government has been able to play both good cop and bad cop. It has cut
prices of petrol and diesel as well as raised duties on petrol and
diesel.
At end-2013, the repo rate (set by the RBI) was 7.75 per cent. At
end-2014, it stood at 8 per cent. Then, the Rupee had traded at 61.90 to
the dollar; now it is at 63.33. A year ago, RBI’s foreign currency
assets (FCA) stood at USD 268 billion, this year has begun with an
impressive USD 295 billion. Prime Minister Modi is a votary of a
“strong” rupee, his party had argued for Rs 40 to the dollar, but the
RBI is happy to see a gradual depreciation! I am pretty certain that the
RBI is buying dollars and letting the rupee slide. Mr Modi and the
rupee are trending together — one crossing, other touching, 64.
On 1-1-2014, I was upset that the BJP had blocked the Insurance Laws
(Amendment) Bill, 2008, and I did not have the numbers to promulgate an
Ordinance or threaten to call a joint session of both Houses to pass the
Bill. On 1-1-2015, Mr Jaitley was upset that the Opposition in the
Rajya Sabha had blocked the Insurance Laws (Amendment) Bill, 2008 and,
therefore, he has used his numbers to promulgate an Ordinance and has
threatened to call, if need be, a joint session of both Houses to pass
the Bill.
On 1-1-2014, I gave up on the hope of persuading the States of
Gujarat, Madhya Pradesh and Tamil Nadu to come on board to get GST
started. I left behind a draft of the Constitution Amendment Bill and an
incomplete draft of the GST Bill. On 1-1-2015, Mr Jaitley nursed the
hope that the States of Gujarat, Madhya Pradesh and Tamil Nadu will come
on board to get GST started.
In 2014, ‘Aadhaar’ was rubbished and Mr Nilekani was fighting an
election. In 2015, ‘Aadhaar’ reigns and Mr Nilekani is forgotten.
THE POLITY
Just before the start of 2014, the idea of a National Counter
Terrorism Centre (NCTC) was foolishly scuttled by non-Congress State
governments. Just before the start of 2015, a non-Congress Central
government has wisely discovered the need for a NCTC. In early 2014,
NATGRID was tottering because of opposition of the Intelligence Bureau
(IB) and insufficient support of the MHA. Towards end 2014, NATGRID was
on a trot with an IB officer as its head and enthusiastic support of the
PMO.
At the dawn of 2014, the International Border and the Line of Control
between India and Pakistan were relatively quiet. At the dawn of 2015,
the India-Pakistan border is one of the hottest borders. 2014 witnessed
over 500 ceasefire violations. About 40 security personnel were killed
or injured in firing, 113 villages were evacuated, and about 30,000
persons were displaced from their homes.
One year ago, the words that resonated through the length and breadth
of the country were development, investment and jobs. Today, the
phrases that dominate public discourse are ghar wapsi (reconversion),
love jihad (love conquest) and Ramzaada vs haramzaada (Ram’s children vs
bastards).
2014 was the year of acrimony. 2015 promises to be the year of acronyms.
2014 began with the message “Mr Modi can deliver”. 2015 has begun with the question “Can Mr Modi deliver?”
