The government is paralysed?, ?the rupee is sinking?, ?the stock market is down on fears of review of treaty with Mauritius?, ?GAAR is scaring away foreign investors? ? there seems no end to the flow of negative headlines in the newspapers these days. Government leaders and officials are stuck on back-foot fire-fighting and giving reasons like coalition politics to explain the current state of affairs. They get no opportunity to either talk about their achievements or articulate what they want to achieve, further reinforcing the negative perceptions gaining ground around the world. It is little wonder that rating agencies have downgraded the country?s sovereign rating proclaiming that ?the government is the big problem?.
If you just go by data, it is not as if our GDP growth rate has fallen off the cliff as it did in 1980, 1991 or 2002. Our total debt as percentage of GDP is well below the risk threshold, our rate of savings and investments has remained stable, and our exports have been growing well. For all the hype garnered by cases like Posco and Singur from problems of land acquisition or environmental clearances, there are enough counter-examples of projects coming up successfully. I suspect if we do the analysis, the percentage of such stalled projects will have come down over the years, given the rapid increase in economic activity in the last two decades. At the same time, despite all the negative news, if you talk to these ?nay-sayers?, none of them will deny the undoubted potential of India. They will all agree that the combination of favourable demographics, the growing consumer spend in non-traditional rural and semi-urban markets, savings and investment rates that still continue to be among the highest in the world, growth of exports and their diversification into new markets make India one of the best countries to invest.
So why the all-pervasive negativism? A wag may well quip that the Indian genetic make-up is to blame. We simply exaggerate both the good times and the bad. When things go south we start to hyper-ventilate, and national newspapers go to town with all the things wrong. And when things go well, we again go overboard, hyping up the good performance and papering over any cracks that exist. The best example of such swings between euphoria and melancholia is the national reaction to the wins and losses of our cricket team. Even though supposedly a gentleman?s game where winning and losing should be part of the game, a win by the Indian team is a cause for national celebration and a loss pulls us down as a nation to the depths of despair.
Laying the blame on our excitable genes is the easy way out and hides more than it reveals. I believe there are two far more rational reasons for the current negativism. First is the issue of expectations that have to be set by the right set of metrics against which we should measure our relative performance before we condemn it. We should of course compare against our immediate past performance. The only problem with that comparison is that once we reach a high, which we did when we hit a growth rate of 9%, there is only one way to go if any roadblocks occur. So when the metrics go south, it is as if the world has come crashing down, even though the growth rate has fallen only to 6-7%, which is still very healthy compared to most countries. This is like our expectations of our cricket team. Having become the world champions in the one-day format, we expect that they will continue to win in all formats all the time and anything less becomes the end of the world!
Second, and in my view the more important reason for this negativism, is the lack of the ?big idea?. There is nothing that binds a group of people, be it a small community, a corporate or a nation like an aspirational idea. It gives a common purpose that is larger than one?s daily challenges, it brings cohesion to policy making, but most importantly it gives the government and political leadership and policy makers an opportunity to articulate what they want to achieve and why. The NDA had captured this in ?India Shining?. One may or may not agree with it and clearly Indian masses saw a big gap between the slogan and reality, but it is true that the global perception and ?brand India? had really improved during that period. The UPA-1 had articulated their big idea as ?aam aadmi?, a theme that ran through their policy making. It was an idea with enormous power, easy to communicate and understand, not just for the Indian masses but as far away as Davos where inclusive growth became the theme of a summit and India the toast of the international jet set. Today if one were to ask anyone in the government what is their ?big idea?, I am not sure we will get an answer except the cryptic exigencies of ?coalition politics?.
This is not to say that we do not have real problems slowing down our economy. We do and there are many, ranging from poor hard and soft infrastructure, government deficits, shallow capital markets, inefficient agricultural markets, fragmented supply chains caused by cascading taxes, power shortages ? the list could go on. India remains an unfriendly place to start a new business with its plethora of permits and rules. But these same problems have been with us in one form or the other for decades. What makes the difference to people is hope and not fear or lame excuses. Hope for a better future. Hope that the government knows their problems, has a clear agenda and is collectively and effectively working to implement it. The government must articulate this ?big idea? to the country and to the world, doing so will go a long way to battle the current wide-spread negativism.
The author is managing director, the Boston Consulting Group, India. These are his personal views