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Indian economy: The Parle-G effect!

Sanjay Jha
National Spokesperson, Indian National Congress party

Parle-G is the apotheosis of consumer fantasy when accompanied by cutting chai. Most dip the rectangular glucose biscuit gingerly into the milky tea and with artistic dexterity pick it up and swallow the tantalizing sweet mixture. It is a gastronomic experience beyond divinity.

I have seen toddlers do it and even those wearing shiny white dentures. Personally, I have often let the residual portion deliberately collapse into my cuppa, and then gleefully scooped up the condensed delicacy.

That Parle-G manufacturing factory, now in its eighth decade, has decided to shut shop. There cannot be a more despondent, depressing scenario confronting its legendary followers who made Parle-G the world’s highest selling biscuit brand.

It is a sign of the times perhaps. India’s quarterly GDP for the period April-June, 2019 clocked a miserable 5%, the lowest in 6 years, signalling that the economy was afflicted with anaemia and needed immediate protein boosters.

The newly elected government of the Bharatiya Janata Party-led National Democratic Alliance has frequently used filibustering techniques to divert attention from its woebegone economic performance. They have also abandoned authenticity of data and brazenly manipulated statistics to manufacture sexy headlines.

But, at some point, you got to skip the atmospherics. Maybe because they have just won a fresh five-year term they may have considered taking the bull by the horns as the electoral risks are fewer, hence the unexpected disclosure of negative facts.

It is a fairly prudent political strategy to do a grand mega-release of bad data in the hope that thereafter things can only get better. However, the track record of sandbagging by the government has confounded many; several believe India’s real GDP (prior to the base year being changed to 2011-12) is closer to 2.5% to 3% and this includes not just the Opposition parties and critical policy boffins but the erstwhile Chief Economic Advisor Arvind Subramanian.

The opacity of official data has made India appear more like China: what you see is not what you get. This is deeply unfortunate and has long-term ramifications for India’s global commercial reputation.

What happened to India’s central bank, the Reserve Bank of India, only exacerbated matters further. By appropriating an astronomical Rs 1.76 lakh crore from the RBI (courtesy employing novel accounting methods to increase annual surplus and siphoning off ‘excess provisions’ by getting a panel to approve it ), the government was, in effect, window dressing its depleted balance sheet.

This unprecedented acquisition of RBI’s reserves had not happened even when India was facing a huge fiscal deficit on account of pump-priming in the aftermath of the Great Recession of 2008.

The esteemed panel (led by former RBI Governor Bimal Jalan) strangely put no riders on the RBI transfers; it could have ensured no fiscal profligacy by the government by mandating that the funds would be used only for recapitalization of public sector banks, a much needed transfusion that has only happened in a piecemeal manner.

But instead it gave NDA a carte blanche to do as it pleases. A democratic republic needs strong institutions for sustained prosperity and egalitarian growth: a compromised RBI showed that another independent regulator was being blatantly emasculated.

Even the Indian stock markets that have rarely mirrored the moribund economy eventually began to waltz with the brutal performance numbers. The markets tumbled downhill like Jack and Jill, carrying the bulls, the bears and the jackasses with them in a collective heap.

Investor wealth vaporized before one could say Jack Ma. A panicky Finance Minister Nirmala Sitharaman abruptly announced measures to arrest the flagging enthusiasm, from tax reversals for foreign portfolio investors to a bizarre panacea for giving the slumping automobile industry a helping hand; the government would itself buy cars.

Considering the fiscal deficit is apparently ballooning (albeit no one knows the real gaping hole), would not this tantamount to helping corporate India through a sleight of hand that effectively aggravates budgetary strain? Incidentally, was this myopic fix-it even a sustainable option?

Should not the effort have been to motivate private consumption expenditure (but where are the jobs?). This car buying was pure absurdity but it made a celebrated CEO of India Inc (many are vociferous cheerleaders of the government out of fear) tweet that he was addicted to the finance minister’s weekly press conferences; astounding pusillanimity is the only way to define this decumbent disposition. Everyone appears scared to speak out the truth.

The finance minister must stop her disingenuous propaganda of India being the fastest growing economy to befool Indians; it is a lie and must be disabused (China is ahead of us, as are others). Incidentally, elementary homework will tell her that as a second-fastest growing economy under Congress/UPA (China was registering double-digit growth numbers), India averaged over 8% GDP growth in a 10-year period of 2004-14; under NDA we are languishing at a wretched 5%.

And if global headwinds do gather ferocity, the India Story is headed for a dark twist.

Not a bad time for the government to smell the chai and recognize that the Indian economy is in a parlous state. Especially without Parle-G.