It says something for a country’s media, politicians, commentators and chatterati that the rapidly unravelling corporate and rural distress is not dominating national headlines, not to speak of the fascinating social and economic transformation of a country of 1.2 billion people that is underway, which anywhere else in the world would have made for compelling reading and debate.

Instead, what seems to dominate the national mindspace are the antics of the dysfunctional Mukherjea family, differences over outlier culinary preferences and perceived indignation over off-the-cuff remarks made by an actor past his prime. It is not just a case of resetting national priorities. Worse, it is breeding an air of cynicism at a time when the economy is on a cusp—it has one window of opportunity over the next decade to break out of the middle-income trap and needs all its energies to be focused on the challenges.

A part of the problem is that the national agenda is being set by a frenzy stirred by rabble-rousing prime-time television debates and vicious social media trolls. Consequently, everyone seems to be feeding off this national frenzy. The tragedy is that policy planners, both at the centre and state governments, seem to be overwhelmed by these pressures. As a result, they are tending to be reactive with efforts designed to make the headlines go away instead of addressing the underlying issues, most of which are structural in nature.

The political economy of this challenge is undoubtedly daunting, yet we have no meaningful public debate or discussion. It is not that these can’t be overcome. But for that, policy planners need to be cognizant and not live in denial or stay preoccupied with misplaced priorities.

Ignore the cold facts at your peril. The collapse of global commodity prices may have dramatically lowered the price of oil and thereby the country’s import bill. But, it is also triggering a fallout in other sectors like steel, which is worsening the corporate insolvency situation. The resulting domino action is part of the reason for a spike in bad debts (which banking jargon describes as non-performing assets) on bank balance sheets. The fallout of bad lending practices (partly on account of crony capitalism) is dramatically pronounced in the current context.

Not surprisingly, therefore, sectors like infrastructure, iron and steel and textiles account for most of the stressed banking assets. More than 11% of the total advances given by state-run banks are stressed and almost 5% of the loans have turned bad. According to some estimates, the total exposure of all banks to the infrastructure space is more than ₹ 9.47 trillion; exposure to the iron and steel sector alone is more than ₹ 2.9 trillion. The enormity of the crisis is captured in a report dated 26 November in which global credit rating agency Fitch claimed that while infrastructure and steel account for a fifth of the total loans in the banking system, their share in stressed assets is a little under half.

Like in the corporate sector, the collapse of global commodity prices has exacerbated an already difficult situation in Indian agriculture and rural India. The two back-to-back severely deficient monsoons—nine states have declared drought this year so far—have exposed the structural fault lines underlying Indian agriculture.

For one, Indian agriculture, which still supports 49% of the workforce in the country, has transformed profoundly, even while its share in gross domestic product has shrunk rapidly. The rapid emergence of horticulture—its output has exceeded that of foodgrains production since 2012-13—has altered the economics of farming in India. Farmers have embraced this, given that it is associated with good returns (so much for the dumb farmer argument, which suggests that they are traditionally risk-averse).

This change in product mix is resulting in greater monetization of inputs like labour and irrigation and also a linking of farm output with global commodity markets; exactly why the collapse in global commodity prices now impacts Indian agriculture. The downside risks have become almost impossible to bear for the farmer, especially with the country facing two deficient monsoons in a row. (Mint did a series on India’s fractured farms, http://bit.ly/1Hjfg2K).

If the economic costs of rural distress are daunting, then the social consequences are frightening. As Mint reported in the past fortnight, farmer suicides have spiked.

* In Maharashtra, 2,234 farmers committed suicide between January and September

* In Telangana, 1,713 farmers killed themselves from June last year till date

* Till mid-October, Karnataka had reported 516 farm suicides this year

It is then apparent that the two biggest challenges facing India at the moment are corporate insolvency and rural distress. Yet, they struggle to make headline news.

Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at capitalcalculus@livemint.com

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