[Business Today]

Published date: 8th Jul 2012

Quit moaning and hear the good news, folks! India is going to be the world’s largest beef exporter in 2012, beating out Australia and Brazil with 1.4 million tonnes of buffalo meat hoofing it to distant shores. You may think the domestic economy is all blood and gore, but it is not.

Last weekend it took a shopper half an hour to get through bumper-to-bumper traffic to one of Delhi’s shopping malls and another half-hour to get through the doors. High petrol prices? Low disposable income? Cautious consumers? Here?

A few days ago Manpower Inc. released a survey of 41 countries and Indian companies had the most optimistic and robust hiring plans globally for the next (July-September) quarter – and this optimism was for the third quarter in a row.

You will have a beef with this cheeriness, of course. The rupee has crashed, exporters are crushed, Standard & Poor’s is threatening to downgrade India’s credit rating, and we have no idea what cataclysmic events are about to unfold over the next few days. Greece may exit the Eurozone, the Reserve Bank of India may or may not cut interest rates, and Pranab Mukherjee may or may not become our next President. But we always pull ourselves up by our bootstraps, don’t we?
The arithmetic is brutal and simple. The effects of any major stimulation by the government now will take close to a year to kick in. By then, our already fevered politics will have become frenzied as all parties stare at a chaotic 2014 election. The prime minister summoned economic ministers for an emergency powwow on June 6 after the lowest economic growth numbers in nine years, and announced a $36-billion, `2 trillion infrastructure ‘target’ for 2012/13, but he was not exactly euphoric, pleading with his colleagues to “expeditiously resolve any inter-ministerial difference or turf battles” that might erupt. In other words, please desist from ritual disembowelment.

Manmohan Singh ought to know a thing or two about politics. Back in 1991, his first reforms had an electrifying effect because he had political backing; then prime minister P.V. Narasimha Rao kept the inter-ministerial hecklers and turf battlers at bay. Today’s prime minister is powerless, and his party chief, try as she might, is hard put to keep the naysayers in their corner. Sonia Gandhi is wedded to the lofty notion of distributing largesse to the aam admi. That sort of stimulation worked for a while, but there is no longer any largesse left to distribute. It’s not clear that the Congress party wants to expend political capital to resuscitate the economy, or that Mukherjee wants to call in his chips among the opposition parties.

Meanwhile, Manmohan Singh continues to be the “only prime minister in a nation of presidents”. He has to contend with a roll-call of state supremos – Mulayam Singh Yadav (by proxy), Nitish Kumar, Mamata, Jayalalithaa, Naveen Patnaik, Narendra Modi – and imminently, Jagan Mohan Reddy.

What can be done quickly to turn around the deep pessimism hanging over us, move the needle on the fiscal situation, and give global investors the feeling that India is still a good place to do business?

The answers are loud and clear – clear the way for foreign direct investment in multibrand retail, roll out the Goods and Services Tax nationwide, slash the subsidy bill by raising.