governance, political economy, institutional development and economic regulation

Can democracy and public secrecy go together. It does in the USA, as Julian established and so i suppose we are doomed to accept it in India too. This is despite the much championed RTI…..a legislation which is as hollow as a bansuri (flute) but sounds as sweet. The government is effectively answerable only to 2.5 % of the population (30 million). 50% of Indians are kids; 5% are too old to care and 40% are illiterate, leaving only the residual 5% who are eager for and could use, more information. Of these, one half, or 30 million have “adjusted” in the time honoured Indian way of “jugaad” (innovative making do) to the mantle of public secrecy and indeed use it to their advantage to arbitrage on “inside” information; bankers; money, stock and merchandise traders; lawyers; industrialists, media warrier, lobbyists, cereal farmers and ofcourse the ever expanding “policracy” (some of whom may well be illiterate).  

The “policracy” earlier used “licensing” to enrich thenselves. Today they use “inside information”. Which stock is likely to go up or down because the government decides to favour or frown on an industry through the numerous, mysterious instruments still available to it; the exchange rate of the INR, the volume of government borrowing, interest rates, exim tariffs, tax changes, public finance led real estate development (fondly promoted by the urbanization economics led growth groupies)….the list is endless.

Where does that leave the average professional, small businessman and progressive cash crop farmer, which comprise the remaining 2.5% of India? These are the middle class who live in congested, urban, ghettos in matchbox homes or degraded, rural, market towns striving to get their kids educated (possibly abroad) by keeping their nose to the grindwheel and ploughing away in their fields, their mom and pop stores or their dingy offices. Pretty much nowhere. Their job is to pay their taxes (some direct but mostly indirect), obey the law, keep out of trouble and cultivate the powerful as an insurance measure against a health emergency (u need to “know” a doctor); a court case to evict a troublesome tenant (u need to “know” a lawyer), an accident (u need to “know” a top cop and have a friend in the insurance company), send money to your daughter in the US or get her passport extended (u need a friend in the Foresign Service)…the list is endless. It is not for nothing that “Kaun baega crorepati” has a lifeline “call a friend”.

What does the middle class think of the latest “media” horror….the slide of the rupee? Many who get remittances from family overseas are delighted..atlast the labors of their daughters, sons, mothers and fathers  overseas are being valued correctly at market rates. Exporters are overjoyed and are buying  more Bentleys in the expectation of an $ to INR to value of 70. Those who sold their cars and mobikes and switched to the metro in Delhi also have the last laugh and their travails of excessive jostling and the unruly and counter productive rush to get in and get out simultaneously (a throw back to the days of scarcity), is almost bearable. New home owners are eagerly looking forward to lower interest rates. Domestic industry with a low import content (cement, infrastructure, metals, is overjoyed with the prospect of low interest led growth). Telecom profits will rise as telecommuting becomes cheaper than an air or land trip. Indian makers of Ganesh murtis, lamps and fittings can now compete with cheap Chinese imports. 

Who is troubled then by the INR slide. It is only the government for whom it is a problem. The petroleum import bill will increase; the cost of subsidies will increase; cash for the leaky “food security” bill will be even tighter, inflation may rear its ugly head unless the  supply side can be energised which the government seems incapable of doing, frozen as it is neanderthal silence. There will be no instant stock market revival as foreign hot money will leave in droves and foreign investment (much of it round tripped by rich Indians) will become more expensive and hence scarce. Foreign holidays in Spain and Phuket will become more expensive as will overseas shopping. All these are no-nos for the “policracy and policracy arbitragers” comprising 2.5% of India. However noone notices that another 2.5% of Indians are smiling.  The remaining 45% neither understand all this nor do they care. For them the price of onions is what matters.,,,and todays papers report the BJP is to blame for that.   

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