Sunday, February 20, 2011

What The PM Should Have Done


I read, from the weekend newspapers, that a 90-minute interaction between the prime minister and television journalists last week didn't go too well for the former. Going by reports, Prime Minister Manmohan Singh  ducked questions and was not assertive enough. Though, as has  been amply pointed out by the few who know him and many who do not, I have never known him to be assertive.

The problem lies elsewhere. When someone invites you to an interaction of this nature, you presume he or she has a message to deliver. A politician in power has the luxury, some might say, of calling you over and then responding to questions that are uppermost on the mind, your's  mostly rather than his or hers.  Of course, politicians know only too well that media tends to pounce on them on issues uppermost on their  mind - the  agenda be damned.

So, its a Catch 22 of sorts. Do you, the politician, come prepared with a  thought out,  strategically important, introductory message that allows you to set the agenda and then mould and massage the subsequent discussions. Or should you wait for em to pile em. I have no  specific experience on the other side, ie the politicians, but have seen sufficient interactions which have gone well or awry because of what the starting point was.

So I would still argue  the best position would be where you seem to have arrived with a tactical agenda. And then talk about what's going on in the real world around us.  How about a few real-life narratives of a  billion people  going about their lives oblivious to the 2G Scams, in all their struggles and happiness. Fighting, succeeding  despite everything. Sometimes not. Share their stories, inspire us.  Very few will  accuse you of being defensive then.

10% Growth ?

Will India grow at 10% ? I know this is one of those questions that will mesmerise us till we do it ? I suspect when we do hit that number, we will be facing far too many problems as an economy to celebrate.  As we already are. Inflation is the biggest bother. I read the views of almost a dozen economists in the last few days on the matter to safely conclude that they have no answer.  Most of them, thankfully, admit as much.

Inflation is one of those things you cannot fix unless you have equal control over the factors of money flow and supply. And of course have summoned the will to play with the levers. There lies the problem. Our ability, traditional and present, to move the levers is limited.  At least in a hurry. Increase interest rates and the growth hawks will scream. Lower interest rates and inflation and asset prices will blast through the roof. In my view, that's already happened. Though not everyone will have the same view.

The solution though is precisely that. To the extent that inflation is a monetary problem, there is no choice but to increase interest rates further. Can we realistically fix the supply side problem, whether in real estate or in foodgrain. Maybe, maybe not - yes I know onion prices have dropped from Rs 65 to Rs 23 per kg, or so. Frankly, we  are better off manipulating the levers we can. The other solution is of course much greater efficiency in the economy, in production and distribution of products and services as well as making the citizen more `visible' to Government subsidies, direct and indirect. So we may or may not hit the 10% mark. But we will be better off.

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