Oct 21, 2008

India - Time to talk more (G.Read)

Vandana Gombar

President Bush was talking to his countrymen again last week. He was telling them, for the umpteenth time, about the “serious” financial crisis that the country was in and the steps that were being taken to protect Americans’ interests. “The American people want a clear explanation of what this crisis means for them, what the government is doing to fix it, and how this will affect the future of the free market that makes our economy so dynamic and prosperous. And that’s what I have come to talk about,” he told a gathering of the members of the US chamber of Commerce on Friday, and went on to detail the government’s strategy to boost liquidity, prevent institutional failure, and the $700 billion package that has recently been approved.


Various leaders from around the world — from German Chancellor Angela Merkel to Britain’s Gordon Brown to Nicolas Sarkozy of France — have been regularly talking to their people to explain the unprecedented crises that their countries are waddling through. There is now talk of an emergency world summit, led by the group of the world’s eight leading nations (G-8) to work out ways to revamp the ailing global financial system. India, along with Brazil and China, is likely to be one of the invitees at the summit.

India’s crisis may be of a different strain than that of the world — according to one view in the government —– but the fact is that the stock market is down to sub-10,000 levels from a level of over 20,000 some months ago. Foreign institutional investors (FIIs) have pulled out $11 billion so far this year, compared to an inflow of almost $18 billion last year. In the three weeks of October, FIIs have pulled out almost $2.5 billion from the equity market. The rupee is depreciating, export growth is stalling, inflation continues to be uncomfortably high, liquidity is scarce and growth projections for the economy are being scaled down. Yet, Prime Minister Manmohan Singh, an economist and a former finance minister, spoke for the first time only on Monday, a month after the mayhem began.

Last week, when the Sensex receded to four-digit levels after a gap of over two years, the Prime Minister:


congratulated Sachin Tendulkar on becoming the highest run scorer in Test Cricket;
met the delegates of the Ganga Seva Abhiyan led by Swami Swaroopanand Saraswatiji;
addressed the All India Conference of Accountants General;
made some remarks at the IBSA (India, Brazil, South Africa) summit meeting;
congratulated Aravind Adiga on winning the Booker Prize;
addressed the National Integration Council meet; and
expressed concern on the situation in northern Sri Lanka.


At a time when every other leader around the world is busy talking to their people, Dr Singh, a key member of the dream team of the 1990s, has chosen to be largely reticent. Yet, there have been occasions in the recent past when he has taken it upon himself to address the nation.

Just a little over four months ago, on June 4 to be precise, he used a Doordarshan address to explain to the nation the “modest” hike in the price of petrol, diesel and LPG. He highlighted the crude oil import dependency that the country faces and the impact the global oil price shock has had on the financial position of the oil companies and the government. The oil price at the time was over $130 per barrel, over three times what it was when the government came to power in May 2004. The result was the ballooning of the oil subsidy bill to Rs 200,000 crore, to plug which the Prime Minister sought burden-sharing by the consumer. The moderate price hike — Rs 5 per litre in petrol, Rs 3 per litre in diesel and Rs 50 per LPG cylinder — resulted in a 1,400-word address to the nation.

Against this, the message on the current crisis, which would affect every Indian in some way or the other, was delayed and predictable — India is hit by the ripple effects of the global financial crisis, we must be ready for a temporary slowdown, we must have faith in the fundamentals, we will try to get back to the 9 per cent growth trajectory, and we have the strength to overcome. Even so, it was definitely required.

In a rare national-level press conference over two years ago, Dr Singh, who was then also holding the external affairs portfolio due to the exit of Natwar Singh, was asked about his twin responsibilities. He had proudly cited the example of Jawaharlal Nehru, the country’s first Prime Minister, who had also held the external affairs portfolio. Besides, Nehru was one of our more communicative prime ministers, managing to fit in a regular interaction with the nation, through the media, on the first of each month.

At a time when the world is facing the worst financial crisis in a long time, and leaders globally are regularly apprising their people about the gravity of the situation and the remedial measures being taken, there is a strong case for Dr Singh to take to the mike more often than he has done so far. Perhaps even every month!

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