The disorderly retreat of the rupee is the signature on the envelope of bad numbers from 2011 for the Indian economy. For the RBI governor, this envelope decides this morning that if he cuts rates, would the finance minister make life hard for him by pushing in a stimulus package for the economy?

The concern will not be unfounded. A cross-check of the figures for the economy in the third quarter of 2011-12 shows they are as bad as they were in 2008-09.

The set of demands sent up by the industry chambers then to both of them are clear. They want a resetting of the interest numbers that will shave off their repayment costs for future loans. But, to make an immediate improvement in their balance sheet, they want the finance ministry to help through tax cuts. Pranab Mukherjee has technically zero degree of freedom to make room for those cuts, but for this government, just out of a bruising battle with industry and keen to make peace, the lack of space will not count. In either case, to decide if there is a need to read the riot act, the key question will be how 2011 squares up with the trends in 2008?

One look at the accompanying table shows the economy is in the same state as it was three years ago. Every indicator in the table, except inflation, shows two trends: (a) the numbers for GDP, non-food bank credit and industrial production are worse in the September to November period than they were in 2008 (the leading indicators for December do not portend any improvement), and (b) carrying on from the third quarter of 2008, the numbers became horrific in the last quarter. The government had to roll out two blocks of stimulus in response.

How sure are we that the 2011 numbers are not trailing indicators for the next quarter too? This is the call for both the governor and the finance minister. How they go about it, we will get to know soon.

There is a key difference between the two years, however. In 2008, the economy was on a roll, albeit with rising inflation, until the global financial crisis just sucked out all liquidity from the Indian economy, grinding it to a halt. This year, with or without the disturbances from the outside world, the Indian economy has been slowing up progressively due to local factors as policy paralysis set in. Rather late in the day on Thursday, Mukherjee acknowledged, ?Perhaps we did not pay adequate attention to internal imbalances, i.e. shifting demand back from the public sector to the private. The present indicators show that both private consumption and investment sentiments have weakened.?

In the last round in 2008, the first task cut out for Delhi and Mumbai was to create a cash lubricant for the economy, other measures followed. Now the cash crunch is there again but, as RBI has found out, easing the supply of money is not working out. For instance, RBI has resorted to two open market operations in November and October, and yet bank credit has progressively dried up. Since the fall in the value of the rupee is also like a de facto rate cut (the price of the currency falls), that too should translate into an impact on bank credit but, as a good part of capital investment is through imports, the two net out.

So reconstruction this time will need far stronger measures.

Meanwhile, it is instructive to look at these four batches of numbers. The other numbers like the Sensex and Nifty, the advance tax numbers and the current account status flow from this matrix. And just as the mutual fund market almost folded up in 2008 as the cash crunch became massive, the drain from the mutual funds too continues apace.

The inflation numbers (WPI monthly data), the most positive of the lot, began to fall rapidly post November 2008 as the purchasing capacity of the economy dried up. It was 6.7% by December and 1.6% by the end of the financial year.

One can expect that as the double impact of the high base of 2010-11 pushes in and economic activity tapers off, the WPI numbers and CPI too will start decelerating rapidly from now on. Food inflation has already come down to 4.35% in the first week of December. But the temperature gauge will only show what?s happening and nothing more.

The index of industrial production will be a far better handle at this stage. After collapsing from 10.9 in September 2008, the sector contracted until the end of June 2009. But, on the policy front, nothing had worsened at that stage. Yet the capital goods index had reversed from October 2008 and recovered its September 2009 form, a year later in September 2010. In fact, the buoyancy in the capital goods usually stretches between March and September of any year for Indian business. But this year, it has decelerated much earlier, by June. So, the tea leaves could be showing a far more protracted slowdown than we navigated circa 2008.

The follow-through comes across in the non-food credit trends. Again at the beginning of the global downturn in 2008, the percentage was 25.72%. The up-tick in the credit growth rate began only after two budgets, after the September meltdown of 2008, as the economy gradually washed off the lethargy in production. In September this year, the numbers slipped to 20.08% and have reached 17.4% by the end of November. The end of the long winter seems very far away.

subhomoy.bhattacharjee@expressindia.com