A loss of faith

By P. V. Indiresan

SINCE LIBERALISATION, stock market scams have been erupting at regular intervals. A top economist in the Government once confessed that the finance and economic experts in the Government are babes in the wood as far as the stock market is concerned. Any two-bit stockbroker can run rings round them, bundle them up lock stock and barrel, and throw them into the deep sea full of sharks before they know what is happening to them.

The stock market is all about sentiment. The Government has failed to inspire the confidence that it can take the nation forward. If entrepreneurs on the one hand and bankers on the other had faith in the Government, banks and even business firms would not be sitting on idle cash the way they are doing now. Instead, business would be flourishing, the stock market would be booming and the UTI would not be bankrupt.

It would be an interesting exercise to ask top officials of the Government how many of them would like their children to settle in India or whether they would prefer them to migrate abroad. Almost all those at the helm of affairs have so little faith in the future of the country they themselves govern that they wish they were elsewhere. No matter whom you ask, the highest of the highest among the country's bureaucracy give expression to frustration, bitterness and hopelessness. As one official put it, ``Every Tuesday, I look at the morning newspaper for the weekly report on the posting of Secretaries. If my name is not there, I know I have another week in my present assignment. That is all the security I have; all the time I have to plan for the future of my Ministry is till next Tuesday''.

The BJP came to power with the slogan ``garv se kaho hum Bharatiya hain'' (say with pride we are Indians). The party would do well to do some introspection and enquire whether Indians are more proud or less proud of their citizenship since it took over the reins of Government, whether senior officials (and even party workers) have more, or less, self- respect than before. It would do well to enquire why members of all professions, bankers, teachers, doctors, even housemaids wish, to go elsewhere; why so few entrepreneurs are willing to start new enterprises even when banks are flush with funds.

Hayami, a Japanese economist, has a theory that politics in developing countries is bound by tribal economies. In tribal economies, with their culture of hunting and gathering, everything belongs to everyone. Anyone can kill any animal, gather any fruit. Even in pastoral societies, one may graze anywhere; all land belongs to everyone. In a way, the same holds true in slash and burn agriculture. Anyone may burn any part of the forest, once again because every part of the forest belongs to everyone.

Apparently, our politics is still in the primitive stage of hunting and gathering. At the most, it has developed to the stage of slash and burn agriculture. The same is true of our stock markets; our industrial enterprises are no better. They are all tribal. In their view, public property is personal property; appropriating it for private use is not stealing.

For our politicians, getting elected is conquest, a form of head hunting. Membership of a legislature is not a trust, let alone a contract in the sense Rousseau envisaged of democratic governance. In their lexicon, Government funds are there to be grabbed, the same way tribals feel free to kill animals and gather fruits. For India's politicians, the bows and arrows of power are there to hunt and to devour public institutions. The fact that all our scandals have been the result of plain and simple theft of public property does not faze them.

In the prevailing tribal culture, this kind of predatory behaviour of politicians has the sanction of the Indian electorate too. For most Indian voters, filching Government assets is not a sin - particularly when a part of it is shared with them. Even those who get the short end of the bargain due to such misuse of public poverty take the lenient view that laying waste Government assets is natural conduct for those in authority.

Our electorate is cynical to the extent it does not expect competence or integrity or fair play from the legislators. However, it does expect them to make good on their boasts. The BJP vowed to restore self-respect. It has failed to do so. The next time the BJP goes to the polls it is liable to lose primarily because it has failed to live up to the expectation that it will restore pride.

In 1987, the American stock market collapsed. In that crisis, Mr. Alan Greenspan, who had just taken over as the Chairman of the Fed, led the country out of recession. Mr. Greenspan used both fiscal and monetary measures. He cut interest rates to curb inflation.

At the same time, he encouraged bankers to lend; he publicly invited legitimate entrepreneurs to come and borrow. That did increase the fiscal deficit but all that money went towards economic expansion - and to inspire confidence. Instead, Indian Governments have misused budget deficits to raise salaries of idle officials, to force financial institutions to fund businesses run by friends.

In a crisis, the leadership has two options. One, it can harp on the past and try to fix blame on someone else. That is what the Government is doing, raking up the mistakes earlier Governments committed. Alternatively, as Mr. Greenspan did, it can put forward a solution to the problem, and encourage one and all to look forward with hope, not backward with anger. There is so much growth potential in the country that the mistakes made by the UTI are remediable. So, the Indian Government can even now persuade unit holders to hang on - by reassuring them that it will re- invigorate the economy and thereby make the UTI (and all other businesses) prosper once more.

That will not happen unless the political system reforms itself. How can an economy prosper when even illiterate MPs can amass Rs. 10 crores worth of assets in a short span of five years? Ensconced inside their vote banks, politicians cock a snook at their critics challenging them to prove any politician guilty beyond doubt. It should be the other way round; it should be incumbent on the part of politicians to demonstrate at all times that they are innocent beyond doubt. Mr. Greenspan succeeded because he was both competent and honest. Our political system should become equally good. For a start, postings and transfers of officials should be de-politicised. Then, politicians will have less freedom to be corrupt.

The present administration has become accident prone. As with Kargil, the IT industry, and the Naga truce, it has got into the habit (like the Indian cricket team) of snatching defeat from the jaws of victory. As matters stand, the Prime Minister may survive till the next elections but is unlikely to leave a worthwhile legacy. It appears it would be best if both he and the Indian cricket captain step down before the respect they now command gets eroded beyond repair.

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