This is the second, and final, part of an evaluation of 15 years of Ms Sonia Gandhis leadership of the Congress party. The first part appeared last week (Evaluating Sonia: black box leader, FE, March 23, 2013, http://goo.gl/JwcMX) and dealt with political aspectsthis article deals with her economic leadership.
As we all know, an economic disaster has struck India for the last three years. A halving of GDP growth, a doubling of inflation rates, a 20% depreciation of the rupee, and record current account deficits (latest6.7% of GDP) are reflective of the deep rot the Indian economy is in.
The economy numbers are exceptionally bad and worse than most other countries. What, or who, is responsible for making the impossible possible For sure, it is the Congress-led UPA government. But who within the Congress party On economic issues, most fingers will point towards the Prime Minister, Dr Manmohan Singh, an economist of international repute, and joint father of the economic reforms introduced under the leadership of non-Nehru-Gandhi Congressman Narasimha Rao in 1991. But this would be wrong.
For too long, we have been made to believe that within the UPA, the political decisions were made by Ms Sonia and the economic decisions by Mr Singh. This was UPAs contribution to an Indian model of governance! Thankfully, and at long last, a major Congress leader, Mr Digvijay Singh, has exposed this myth. In a recent interview, he stated, Personally, I feel this model hasnt worked very well. Because, I personally feel there should not be two power centres and I think whoever is the PM must have the authority to function. So we neednt indulge in shadow boxing any moreSonias own senior party officials (Digvijay is also a mentor to Sonias son, Rahul Gandhi) admit that all decisions, political and economic, have Ms Gandhis authoritative (authoritarian) stamp.
In addition, there is substantial evidence that the economic decisions made by the UPA couldnt possibly have been made by an economist, let alone an economist of as much repute as Dr Manmohan Singh. As an economist qua economist, he recognised, more than 50 years ago, the role that exchange rates played in generating exports, and did so when the fashion in India, and most of the world, was one of export pessimism. As an economic policymaker, he was the finance minister who helped initiate, and implement, the largest change in mind-set reforms India has ever seen.
I have challenged, in every forum possible, whether in the last nine years of the UPA rule, there has been a single positive economic policy that the UPA has initiated. The answer is No; the best answer received is that the UPA-1, and definitely not the UPA-2, did no harm. It is logically not possible that UPAs economic policies have any relationship to Manmohan Singh, the economist. If they do, then I am a Bharatanatyam dancer. So lets stop the charadeSonia has been, and is, the boss on both economic and political policies of the UPA-1 and UPA-2.
Actually, Sonias economic policies have their origin in the creation of the Congress party in 1885. It was founded by members of the occultist movement Theosophical Society. What does occultism mean Occult comes from the Latin word occultus which means clandestine, hidden, secret. According to Wikipedia, occult refers to knowledge of the paranormal as opposed to knowledge of science for most practising occultists it is simply the study of a deeper spiritual reality that extends beyond pure reason (emphasis added).
It is impossible to better describe Sonias economic policies. Only something that defies pure reason would have led Sonia to promulgate policies meant to help the poor but which ended by hurting them massively instead. Sonia UPAs alchemy raised procurement prices of foodgrains beyond reason, helped a few rich farmers (say, 20 million) and massively hurt 10 times as many landless agricultural workers. And by generating super-inflation for four years, transformed the Indian economy beyond recognition.
Or take Sonias self-advertised policy of providing employment to the poorest of the poorthe MGNREGA programme of providing back breaking work employment to the poorest of the poor. To date, about R1,70,000 crore have been spent on this occult programme. According to the detailed NSS 2009-10 data, the poor received only a fifth of this money as wages. Which means that about R1,40,000 crore went to the non-poor. This is not economics, not even occult economics, nor even voodoo economics. This is alchemy economics la Sonia.
A defining characteristic of this beyond reason Sonianomics is in your face populism. The huge fiscal deficits run by her government are near universally acknowledged (near because not acknowledged by the alchemists within the party) to be responsible for the destruction of the Indian economy. So what does the latest UPA Budget for 2013-14 do It plans for 13% GDP growth, 16% higher expenditure growth, financed by 19% tax revenue growth! This is meant to bring sanity into the fiscal deficit sphere! Heard a better definition of occultism lately Or take the announcement that the DMK is leaving the UPA. Sonias Titanic responsehave the Cabinet pass her second favourite occult policy, the Food Security Bill.
A summary sequential view of Sonianomics is as follows. First, the policies have to be do-gooder in nature. Second, they have to have heavy state involvement. The first two are necessary and sufficient to achieve the third objectiveencouragement of corruption.
More corruption charges have been levelled against Sonias government than any in Indian history. Her late husband, Rajiv Gandhi, lost the elections in 1989 (after obtaining three-fourths of the seats in 1984) in large part because of his alleged association with the Bofors gun scam. The alleged bribe paid for that contract, R64 crore, or $40 million at the then exchange rates. Even a conservative assessment of the cumulative corruption associated with Sonias mistaken, misguided, and misapplied flagship MGNREGA job schemeher universally acknowledged babyis at least half of the R1,40,000 crore estimated above. That is $14 billion or an amount equivalent to 350 times the Bofors amount. Note that this is corruption in MGNREGA alone. Coal, telecom, foodgrains policythe list is just as endless as the decline in Indias fortunes.
So what is to be done, or what can Ms Gandhi do to reverse hers and Indias misfortune She can start changing her occult spotsNOWso that, by the time of the elections, the economy, and the poor, recover somewhat from the depths.
Or she can observe the wheels of history. Recall that Annie Besant became the President of the Congress party in 1917. If Ms Gandhi does not change, then she risks the following obituary of the party she heads. It took a white, European, socialist, woman to help create the Congress partyand it has taken a white, European, socialist, woman to destroy it more than a hundred years later.
Surjit S Bhalla is the chairman of Oxus Investments, an emerging market advisory firm, and a senior advisor to Blufin, a leading financial information company. He can be followed on Twitter,@surjitbhalla