Dear Morgan Stanley & Co: Was this stock-market volatility necessary?
1. When the exit polls came out on Saturday (June 1), predicting a Bharatiya Janata Party (BJP) tsunami of 400 seats (one of the psephologists would later cry copious tears on national TV), there was a unanimous outcry of vigorous celebrations amongst India’s big stock-market investors, mutual funds, speculators etc. Rs 12 lakh crore growth in wealth was witnessed on the following Monday.
This was based on the flawed presumption that only BJP is good for the stock markets. You got it wrong: Dr Manmohan Singh/UPA gave over 400% stock market returns as compared to Narendra Modi’s 260% returns over a comparable 10 year period. Secondly, the most crucial indicator of earnings is economic growth: Congress/UPA delivered 7.8% over 10 years, compared to NDA’s 5.9%. So why were some of you sitting smugly in sexy airconditioned offices in New York and London etc. pontificating on India’s equity markets, deliberately blindsided to reality?
2. You will probably argue that BJP brought in GST (introduced by Congress, sloppily executed by BJP) and Insolvency and Bankruptcy Code (it is mired in controversies and allegations of asset-stripping, shady bank haircuts and blatant favouritism ). So, what were the big-ticket reforms in the last 10 years? NPA write-off of Rs 16 lakh crore? Or are you just thrilled that corporate India got an annualized tax-break of Rs 145,000 crore per annum from the finance minister, which boosted their net earnings, and inflated their stock-prices?
3. Why is Gross Fixed Capital Formation below 30% of GDP (during UPA it had touched 35%)? Why is manufacturing share in India’s GDP slumped to 14% of GDP (remember your sound bites on Make In India)?
4. Let’s cut to the chase: Don’t most of you cite “ jobs” and “inflation” as the big issues in the US presidential elections? Why are you ignoring India’s serious unemployment crisis (48 lakh youngsters with MBA, PhDs, engineering degrees etc. applying for 60,000 jobs to become police constables in UP?), food inflation etc? This is unalloyed mendacity on your part.
5. Are you not aware of the Hindenburg Report on the Adani Group? You think it is politically motivated? Even SEBI has woken up to the blatant manipulation of regulatory processes. Do you think it happened without political patronage? You all destroyed Enron and Arthur Anderson, but in India, greed, crony capitalism and corruption are kosher? Your hypocrisy is laughable.
6. What about the Electoral Bonds scam? Would you allow Donald Trump or Joe Biden to raise campaign funding through extortion, threats of arrest, abuse of state power, and charitably give away away infrastructure projects? The list is very long, but I will spare you more crimson blushes.
Bottom-line (your favourite obsession): India is at the lower level of a middle-income nation. Our per capita income, human development index, poverty levels, income inequality, etc are serious challenges. No government can give lectures on free-markets and unrestrained liberalization without addressing welfare needs of the bottom of the pyramid. This is indeed the age of responsible and compassionate capitalism (I am quoting Davos). In fact, your right-wing favourite Modi has followed the Congress prescriptions of MNREGA, food security (five kg foodgrains for five years to 60% of Indians) etc himself. Trickle-down economics is great intellectual theorisation while at Harvard and Stanford, but ask that of Indian farmers, rural and urban poor, and landless labourers, and they will tell you to take a dip in the Ganga river. And stay there.
The Rs 30 lakh crore market wipe-out that followed the election verdict was a product of the false perceptions created by myopic propaganda machines of the super-rich lobby that you represent. Get out of your BMW and go to Barabanki. You cannot know this fascinating country by just talking of Delhi Darbar gossip at the Taj Chambers over a glass of Moet and Chandon.
Sanjay Jha is a former national spokesperson of the Indian National Congress party. He also worked as a banker and an internet entrepreneur.
