Bemoaning our fate is something of a national signature tune. One can?t say how ancient this hoary tradition is, but it certainly has been a fixture since colonial days, an accompaniment perhaps to the rise of the servitor tradition. The stereotype sweaty Indian clasping and unclasping his hands, casting despairing looks at the fates above, making excuses for the transgression of a job not done, has about edged out grace, reserve and self-confidence.
Thirteen years in a row we have had good monsoons. The break in this winning streak surely had to come some time, if not this year, then the next. India is fortunate for the abundance and regularity with which the monsoon carries precipitation to the land and perennial rivers bring down snowmelt. How else do 1.4 billion people live in this cramped sub-continent? One would think that we would count our blessings and take in our stride the occasional year when the monsoon falls short.
But for the monsoon, is everything else doing just fine? Has not throttled economic growth in the past several years been despite one good monsoon after another? Are not the reasons that undermine the profitability of business ventures and thereby dampen investment, got just about nothing to do with the vagaries of the weather? But have everything to do with our procrastination in pushing the reform agenda ahead ? whether in the power sector, in the financial system, in the regulatory environment or in the management of government finances?
There are many elements of the ancien regime that continue to exert powerful influences on our polity. They do so by fracturing the populace into multiple groups, each told that their interests are at odds with the other. Thus, we have the celebrated rural-urban divide, whereby 40 per cent of the population living in urban areas is sought to be burdened by the cross of keeping the rest disadvantaged. As if the woes of under-development in rural India are evils wrought by urban India, not by bad policies implemented even worse. So, the weak monsoon this year portends the very real danger of the champions of backwardness stalling the reform agenda, using their powers of the lachrymose, hoping thus to gloss over their bankrupt governance record.
Tax collections in the first quarter of 2002-03 were up 44 per cent. Sure, last year was very bad, but the average growth for the past four years at little under 10 per cent surely does not signify an economy on its knees. Just as the 30 per cent growth in Q1 of small savings and public provident funds collections do not. Non-food credit has grown in this period by about 15 per cent. Exports are up by over 10 per cent.
Certainly, a weak monsoon will exact a price on kharif production and will place less income in the hands of agriculturists this year, than in the last. Less sales of tractors and maybe of two wheelers. Some adverse impact on non-durables, but more on the top line I would guess, than the bottom line. All this will pass ? there is the rabi season ahead. And who is betting on a repetition of a bad monsoon next year? Anyway, the portents of war in the Indian Ocean region are more immediate than bad weather next year.
The great engine of world growth ? the US ? isn?t doing too badly, however may be the read on the second quarter (April-June 2002) GDP numbers. Year-on-year GDP grew by 2.1 per cent, although there was a relative deceleration in growth over the previous quarter. And the good news for exporters to the US is that imports into that country grew at the astounding rate of 29 per cent over the Q1 of 2002. The greenback has recovered ground, and Europe and Japan ? major net exporters to, and investors in the US ? seem to like it that way. So, all is by far not lost, and the thing to do, is to get ahead with cutting the huge backlog on reforms, and create the opportunity for tomorrow.
The author is economic advisor to ICRA (Investment Information and Credit Rating Agency) and editor of Money and Finance, the ICRA bulletin