One wonders why some people are going round saying that the Indian economy is on the verge of collapse. It has already collapsed!
Industrial growth in October was just two per cent. It was thrice that in the same month a year ago. For the seven months April to October, industrial growth has averaged three per cent, against twice that a year ago. The outlook for coming months is not very rosy either, going by some of the surveys by industrial associations.
There is no movement on the export front, in spite of claims by the commerce minister that exports will exceed last year's figure by ten per cent. So far, they are running three per cent below last year.
And the Balance of Payments situation is so grave that most people believe the rupee will be devalued very soon.
The current account deficit this year is likely to touch three per cent of gross domestic product. We had the same figure seven years ago, when the country had to sell its gold to keep home fires burning.
Things are not so bad this time since foreign reserves are quite adequate at the moment. But one never knows.
What has gone wrong? Why is the economy not picking up? We have had three years of slowdown but nothing seems to work.
The finance minister has lost credibility and so has the government. Investors are on strike, not just foreign investors, but Indian too. November was the first month when there was not a single public issue. Companies are actually busy getting rid of some of their assets, not acquiring new ones. They are so down and out that they simply do not want to raise further capital.
There can be no growth without investment. And if the investors themselves go on strike, there can be no investment.
One reason for lack of investment, and therefore lack of growth, is the lack of faith in the government. And the reason for the lack of faith is the belief that the current government is hostile to Indian business.
It sounds strange -- this belief about what is after all a nationalist government, or a government headed by a nationalist party. But that is not what Indian businessmen think. They think the Vajpayee government has done little for them and favours foreign companies and multinationals
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