Last week I was in a conversation with a seasoned CEO from a well-known industrial conglomerate. He commiserated with me about the election results with the perfunctory, “Hard luck, but well fought” sympathy line, perhaps the most popular cliché in the sporting arena.
He did not look like he had an ideological predilection but seemed reasonably nonchalant about the result. I guesstimated that he voted for the Bharatiya Janata Party (BJP). Being a chronically curious mind, I decided to probe further. “Why do you think did the BJP win all over again with an even bigger majority,” I asked him.
“Stability”, he replied. “The business community does not like to see policy volatility. At least now we are sure that we know what to expect”. Even without wearing my political accreditations, I was not convinced with that rather bland response. “Please explain; stability or growth?” “Both”, he responded. “They go hand in hand”.
I was compelled to challenge him, momentarily forgetting that this was not some acrimonious hot-headed TV debate. “So fair enough, I concede the stability argument, but where is the growth? In fact, there is no direct co-relation between the two based on hard data. And incidentally, the latest GDP figures released by the government within days of the spectacular win of the NDA in India’s seventeenth general election showed that India had slumped to a disconcerting 5.8% GDP growth in the last fiscal quarter of January-March 2019.” My dear friend said nothing but just smiled back and nodded in agreement.
“Perception”, he said, “it’s all about perceptions. Have you seen the stock-markets? They are sky-rocketing and breaking new sound barriers with every forward leap. It is about sentiment finally. Nothing else matters.” That this cursory dismissal of symptoms of an impending economic slowdown was coming from a man who regularly crunches numbers and makes business forecasts based on macro-economic fundamentals and micro-industry trends left me confused.
The falling GDP had lowered India’s annual growth of 2018-19 to 6.8% compared to the feeble 7.2% recorded in the previous financial year. This was India’s lowest GDP growth in 20 quarters, lower than what was inherited by the BJP/NDA in 2013-14 from the UPA when it was at 6.4%.
And considering that we were vaingloriously celebrating the “fastest growing economy” tag ahead of China, India has now slipped below that of its towering Asian rival. Based on empirical evidence, India had flattered to deceive and actually performed sub-par, but clearly the voters seemed indifferent to their economic wretchedness.
If it is all about prevalent moods and feel-goods, then why do we make such a hue and cry over equity research, policy wonks opinions, global trends and authentic data? I insisted on having the last word, a natural collateral consequence of being a spokesperson of the Indian National Congress. “So, basically you are saying that this was a vote for stable under-performance.” My friend chose to ignore that caustic riposte. The double whammy followed immediately thereafter; as suspected, the Labour Ministry confirmed that India’s job crisis was at a perturbing 45-year high at 6.1% in 2017-18, corroborating our worst apprehensions raised earlier based on a leaked report. That doomsday report would have bludgeoned any political party, but the BJP trashed it as a malicious leak and instead got several private professionals from the Indian Institute(s) of Management (IIM) and public sector banks to bedazzle us with conflicting reports that all was hunky dory.
In fact, the lamentations from the government were that the real problem is not jobs per se but the data-capture of the same. This was statistical gobbledygook, but based on the results that came out on May 23, it clearly worked. It’s the economy, stupid seems to have been nothing more than mere irrational exuberance with zero political capital in India. The NDA government got away despite a disastrous performance. As I write, a perceptible slowdown appears likely, with a drastic fall in automobile sales (almost 16%), the Index of Industrial Production at a 21-month low, and the manufacturing sector contracting by 0.4% in February-March this year.
India’s largest car manufacturer Maruti slashed its March production targets by 25%, a clear exhibition of contracting demand. The Non-Performing Assets ( public-sector banks) conundrum remains unresolved. There are no green shoots visible, even as international headwinds could soon turn into a blizzard. The deleterious repercussions of the USA-China tariff war could take the global economy into a noxious nosedive. And the US economy is already under “ recession watch”.
The NDA may have won the election, but the fact is that it was able to manipulate conversations on economic truths because of two faithful accessories in crime; several pusillanimous cheerleaders in mainstream media playing ball and secondly, BJP’s digital army weaponised with pestilent fake news. Both kept the people of India in the dark and populated distorted content in a falsification campaign to hornswoggle us all. But the chickens have a tendency to come home to roost. Truth does surface.
As he was about to leave, the CEO stumped me: “You should count yourself lucky that you lost. The economy is so messed up, I see hard days ahead. We are in serious trouble. I don’t think these guys can manage.”
I was left stupefied, trying to hold on to my chair, hoping that it was stable.