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Business Commentary/ Jay Dubashi

Monsoons, not ministers, will decide the fate of economy

Right now, there is no government in Delhi. In fact, there has not been one for the past three weeks ever since the Vajpayee government was pulled down. There is, of course, a prime minister, a home minister, and, naturally, a finance minister. But they are worried about other things than national economy, which is always very low in priority where Indian politicians are concerned.

Does that make a difference? Not if you go by what is happening on the stock market. The Bombay Sensex has gained 645 points in the last ten sessions, and has surged higher than the level it reached after the Budget.

Of course, stock markets dance to their own music and seem to be immune to goings on in politics. This is a good thing, and it shows how politics and economics have now got divorced from each other.

In fact, the wheel has turned full circle. It is not politics or political leaders who decide the course of the economy, but the other way round. And that is how it should be.

This has been a poor year for the economy, with almost all growth indicators stuck in their grooves. Industry was badly affected, with a growth rate of barely four per cent, the least in the last seven years.

Exports did not do well either, though there was a spurt towards the year-end which took the growth rate to 3.7 per cent. It was agriculture that saved the economy from crashing, as it had done last year too.

In view of persisting reports of droughts in several parts of the country and unreasonally high temperatures in the north, we are once again in for another summer of discontent.

In Delhi, power cuts have become the order of the day, as, of course, they have been for the last ten or twenty years. In several states, water shortage is very acute and there are reports of large-scale cattle deaths and other calamities. It is however too early to say how all this will affect agricultural production this year.

With politicians engaged elsewhere, such a situation might lead to the same kind of fiasco that brought down several state governments in elections last year.

In Delhi, and also in other parts of the country, onion prices touched the skies and vegetables prices jumped over the moon. Things are not better this year, though the summer has just begin. But politicians are apparently not perturbed.

But businessmen are not perturbed about politicians either. During the crisis last month, very few businessmen were seen in Delhi, though, like locusts, they are always present on such occasions.

The stock market did go up and down, but the movement was basically speculative in character. Once it was clear that an alternative government was out of question, the stock market stabilised and has since been going up and the benchmark index, the Sensex, may even touch 4000 shortly.

Foreign investors have also not been put off as badly as feared. In fact, they are as active as ever. Most foreign companies are busy planning for the future, with large investments and or acquisitions for which they do not have to approach the government in Delhi.

The whole process has now been institutionalised and all you need at the end is a dhobi (laundry) mark from a couple of babus (bureaucrats) in Delhi. Decisions are now made increasingly at bureaucratic level, and politicians do not come into the picture, except in certain rare cases.

For all practical purposes, the babus are running the government in Delhi, not Vajpayee & Co, who are just holding the fort, because, under the Constitution, they have to. Some ministers do not even go their offices, for there is little work for them there. And once election dates are announced, most of them will not even be seen in Delhi.

For the next four or five months, it is the monsoons which will decide the fate of the economy, not the ministers. I think it is a good thing.

But there is, of course, one snag. If the economy crashes, it is the ministers' heads that will roll. If you ask me, that is a good thing too!

Jay Dubashi

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