By Shivaji Sarkar
India’s economy has few friends, many disguised pals and innumerable enemies. Wherein we need to understand whether World Bank prescribed diagnosis of seeking foreign investment is a boon or fraught with innumerable risks. Also realise some super powers are eyeing India to exploit and not help it.
Unfortunately, Finance Minister Chidambaram’s yet another assurance of “reforms” sounds good but the path hackneyed. Merely a diplomatic approach at not annoying any player might appear gentlemanly but are our interests protected? Is it happening?
The economy is in shambles. Everybody, Prime Minister Manmohan Singh, Planning Commission Dy Chairman Montek Singh Ahluwalia and Chidambaram agree. But none want to give hard medicine doses. Can the economy be quarantined for some time, say five years? A tough and difficult decision with global giants breathing down one’s neck.
The weakening of the rupee might is testimony that India is losing out against powerful western nations machinations who are transferring their problems to India and other developing nations, Brazil, Chile, Mexico, South Africa and Turkey, all with high current account deficit While Chidambaram says there is no reason to panic, we need to look at US, UK and Euro Zone. Despite severe crisis, worse than India, their currency maintains high value. This is not because of any intrinsic strength but because they transferred problems to far-off regions which are dependent on exporting to them. Today, they have cleverly announced policies curbing imports, notwithstanding exports from US-Euro zone did not fall.
Undeniably, a global probe is needed on how these countries conspired to shatter developing nations economies to sustain their own, leading to high inflation, above 6%, except Chile. Yes, with weakening rupee India is importing inflation and lack of measures to check prices have added fuel. Recent UN reports reveal that international (mostly western) speculative betting in food grains has caused severe price hike despite no supply side problem. Whether it is a corporate or concerted Western powers move, it helps given that the purchasing power capacity decides the intrinsic value of the currency. The US has cleverly done so while India and other nations have faltered. Thus, inflation helps these economies create conditions for demanding relaxation of their activities therein.
With the US carefully remaining in the backdrop it got its corporate lobbies and lawmakers to raise patents issues and domestic laws against India to carry forward their onslaught on India’s economy.
We need to investigate how some Indian pharmaceutical companies have to pay heavy penalty for no fault of theirs. New Delhi has been unable to challenge US and European laws which give their companies undue weightage in dealings against global competitors.
While Ranbaxy and Sun Pharma were forced to pay $ 500 million penalty each, the FDA is protecting Pfizer. Bluntly, the generic drugs produced by them had only minor patent infringement. But the US courts and FDA are known to be tough with foreign companies including European.
These are not isolated incidents. Last week US corporations, lawmakers and administration officials accused India of “unfair, restrictive, protective and discriminatory business practices against American entities” and sought President Obama’s intervention. A well timed move, just before Secretary of State John Kerry’s visit to India for the annual strategic dialogue.
Said a 16 business organizations consortium, “It is time the government of India ended discrimination against our nation’s exporters…. If this engagement is not fruitful we ask the US government to respond purposefully using all available trade tools and diplomatic engagement”.
Added a Senator Rob Portman said, “We have lot of concerns about India, their emerging market access barriers, and protectionist measures”. Two others batted for the pharmaceutical industry accusing New Delhi of inadequate intellectual protection and shutting US companies out of its markets (read Walmart and insurance).
Clearly, corporates are furthering their interests through its Government in countries. One company actively organized a coup against a South American country. Indeed, alarming. India needs to learn from this and avoid machinations of these powerful nations.
Pertinently, one needs to listen to a CIA agent on how the US corporates and Government work in tandem and use different Administration arms to chastise its adversaries. In the Euro Zone Arcelor Mittal is being constantly targeted in Belgium and France. India needs to probe whether this is a racial discrimination.
Moreover, the ramification of annulling land ceiling laws is also being viewed. While Emaar has used foreign funds for acquiring land, GMR is flouting all norms on its Delhi airport contract. These companies are stated to have blessing of political circles. Ditto how global players work.
Thus, if the rupee is losing out it should be not be seen as a domestic phenomenon as a weak rupee suits large corporate investors. They can make less real investment and acquire fortunes. In actual terms India is getting less foreign investment and is forced to compromise, thereby losing its critical assets for peanuts.
The battle of the rupee cannot be fought within India’s boundaries but has to be taken offshore and the international currency system challenged. We can seek help of BRICS and ASEAN to rectify our currency market. There is no reason for it to remain tilted towards Western players. The world needs a level playing field lest new colonialism is perpetuated through artificially strengthened currencies.
Additionally, there are many ways to reform the economy. The Government needs give up its preference for foreign investment till the rupee reaches a proper level, around Rs 40 to a dollar. Till such time inviting foreign investment in any form is not a lucrative but a losing proposition as it imposes unwanted penalty in rupee terms on Indian firms.
Along-side India should shelve investment proposals. Chidambaram is incorrect when he says he does not want to compress expenditure, he needs to cut bureaucratic expenses, particularly babus perks and many other unnecessary Government expenses.
In sum, new reforms have to create an atmosphere of protection, challenge international laws, WTO provisions, patent system for large conglomerate and powerful countries. Reforms have to go beyond petty politicking. Undoubtedly, a difficult task but we need to take the first step to becoming an international player. —– INFA