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My copassenger on the 8.40pm Jet flight from Delhi to Mumbai made a comment that the flight was remarkably empty. We had been chatting about the state of Indian economy. “This is supposed to be the prime evening flight and also the most reliable. For it to be empty indicates that things are pretty bad already”. He went on to speak about the empty billboards he is seeing on his drive from home to work. He was working as a risk manager in a senior position at a leading Mutual fund. Part of his job was to notice such tell-tale signs of economy, which would eventually get reflected in the outlook on specific stock prices.

I was warming up to the conversation having been primed by a half-read book lying in my lap The big short. It had been a frustrating day filled with jinxed meetings and the baking Delhi heat did nothing to help the spirit. As the plane started to taxi the world started to zip past me till it all become a featureless blur, and my frustration vanished along with the city below.

THE FALLEN ANGEL

We were now busy deconstructing the issues that faced India, and what may be the right economic model of India. He was all for opening up of India, for encouraging more capital flows and creating more investor friendly environment, and bemoaned the lack of political will to affect changes.

S&P had recently downgraded India’s sovereign rating and has released a scathing report on the state of paralyses that India is stuck in (Will India Be The First BRIC Fallen Angel?). The report takes a clear eyed look at the cause of political and economic paralyses. What is striking is that it mentions that even the cabinet ministers are divided on reforms and way forward. The UPA allies have been openly blackmailing the government on all policy discussions for getting more concessions for themselves, and the Opposition has increasingly become unreasonable. The truth or welfare of people has become irrelevant to the politicians. But the fault of letting things fester still lies with the government for not being able to get everyone aligned on a common national goal.

While government struggles with its backroom negotiations with the political parties, it is fighting a losing battle of managing public perception. It has a dozen spokesperson who are directionless. They are erudite, have loud shrill voices and work hard at defending the government actions everynight on primetime TV news fighting each accusation with a counter accusation, but they are making no impact on public opinion. This is making the government even more vulnerable to political blackmailing. Reacting to accusation is anyway a weak strategy. There is a different, more effective approach to handling this. The failure of the current government is nothing more than a communication problem.

THE COMMUNICATION PROBLEM

Take the example of petrol price hike. We know that the country cant afford to subsidise it. The issue at the heart of the problem is the lack of resources and choices that we need to make as a country – should we subsidise petrol or build roads/ schools etc? We cant do both, assuming corruption as a given in either scenario. The government has tried to explain its actions in terms of compulsions – of global oil prices rising, and rising subsidy costs, and of a promise that in the future prices may come down too since it is market linked etc. No one buys a argument that is premised on helplessness, besides it is poor body language.

A better way to phrase the issue is to link it to the benfits it brings. It needs to be positioned as – Hiking petrol prices is about helping the poor and saving money to build better infrastructure, schools and hospitals etc. But subsiding petrol makes the poor people pay the rich to drive their cars. What do you as Indians want? You want us to continue subsidising the rich? Reframing the issue can kill the debate and get all opposing political parties to shut up. This argument gets a bit more tricky with Kerosine and Fertilizer subsidy though, but those decisions are about such trade-offs too and need to be discussed accordingly.

There are some other policies that need more deliberation and public discussion, like FDI in retail. There is an argument to be made in its favour for increased efficiency, supply chain improvement, better price realisation for farmers, lower cost for consumers etc. But it will also lead to loss of jobs since the global retailers will cut out the middelmen to make the supply chain more efficient, so one cannot ignore the rights of the millions of traders (and their families) who are feeling threatened by this. The benefit that will accrue to farmers is also not clear – even USA needs to subsidise its farmers by $25Bn a year, and Indian governemtn hasnt clarified how it plans to address this issue. Irrespective, it will be definitely better than where things stand today for them. In such a complex case while government needs to be assertive, it needs to also listen to all the stakeholders otherwise then it will be catastrophic for a democracy. It needs to pick the right issue to focus on and build public consensus. Which in this case is the farmers plight.

Income of farmers across the country has stagnated and probably fallen over the last 20 years, while rest of India has prospered. As a result a million farmers have committed suicide since 1995. More than 75% of Indians depend on income from farming, and even industrial growth is being driven by rural India – 48% of all motorcycles and 44% of TV sets are sold in rural India. How can the issue of FDI in retail be repositioned as a pro-farmer initiative and thus take the discussion away from it being seen as foreigners taking away the jobs? Can part of the FDI in retail be structured in a way that some benefit accrues to farmers directly?

THE INDIAN FIX

Government loses all these debate because it approaches them defensively driven by fear of losing power, rather than any honest spirit of a reformer. It needs boldness and imagination and a loud voice to reach out to people. It needs a more credible spokesperson for itself. Manmonan ji is missing, and Sonia ji has made a virtue of keeping silent even though she is the only unifying force in UPA. Unless this communication piece gets fixed, we are not going anywhere. Instead people like Mr Kapil Sibal are busy launching bills to regulate the internet by calling it ‘Bharat maata ki izzat khatre main hai’ because of all the derogatory stuff it has about Sonia ji on it, or he busy chasing the IITs to toe his ministries line and other such non-sensical issues. These are side issues in the larger context of India’s problems and there is almost no political debate on them too – that may also be because most of the politicians are computer illiterate and dont realise what is at stake, and none have struggled through higher education system of India to have any views on it.

The plane prepared to land in Mumbai and our conversation winded down. I had conveniently skipped over a part of India where power and water probably only came for a few hours daily, where crime is rife, opportunities are limited, where hospitals dont exist, and the few powerful men rule the roost. I walked out of the airport into a city of bustling opportunities, where power cuts are rare, roads are decent (people crib about potholes, and not about the lack of roads), cops turn up for work and some like Dhoble who do more than anyone wants really. I drove out of airport into the brightly lit city, enjoying its infrastructure and hoping that someday all Indians will atleast experience this. If only our Prime Minister finds his voice…