Posted by: Mehul Srivastava on November 9, 2009
After a long hibernation from the lecture circuit, India’s soft-spoken and carefully scripted Prime Minister, Manmohan Singh, stepped onto a dais and promised more of the same.
Well, not exactly, but pretty much.
At the India Economic Summit Nov. 8, one of the many speak-a-thons that mushroom in New Delhi once the weather improves, Singh came out for a little bit of applause, a little bit of politics and little bit of wishful thinking.
The state of the Indian economy? “The worst is behind us.”
The future of the Indian economy? “With a normal monsoon next year, we hope to achieve a growth rate of over 7 percent…Our medium term objective continues to achieve a growth rate of 9 per cent per annum.”
Eradication of poverty, hunger and disease? ” I am happy to say that we have delivered substantially on that promise. But the task is by no means (sic) unfinished.” (I think he meant finished )
But there is news in between the platitudes. For instance, India’s fiscal stimulus package, which measured anywhere between $50 and $80 billion, depending on how you count it, will be rolled back starting early next year. By most measures though, it was money well spent - government spending kept India’s economy afloat when the private sector all but retreated last year. The effort almost broke the bank, though, and as the deficit climbed to 12% of India’s $1.2. trillion GDP, it was clear there was no more where that came from.
Speaking of billions of dollars, Singh had just had a tete-a-tete with the Chairman of Wal-Mart’s board, S. Robson Walton, and India’s Commerce Minister, Anand Sharma, brought up Walton’s enthusiasm for India as he totaled up foreign investment (some $35 billion for the twelve months ending March 2010, he estimated). Wal-Mart runs one store in India in a tie-up with Bharti, where it is allowed to sell only to shop-owners, not to customers. But when I visited that store earlier this year, in Amritsar in North India, not far from the Pakistan border, the lines ran out the door, the shoppers ooh-ed and aaah-ed at the prices, and the cash registers, literally, jingled. And even though organized retail is a puny little part of India’s $450 billion retail industry, Wal-Mart has been lobbying India’s government to open up foreign investment rules so that it can sell directly to customers.
Sharma is the shyer and less boisterous heir to Kamal Nath, who was India’s last Commerce Minister, and is now relegated to drumming up foreign and state investment to build roads. It’s an interesting study in contrasts - Nath made his name by holding up the last set of the Doha round of talks for a WTO-led global free trade pact, questioning the true intent of western investors. Now he flies around the world asking the same investors, if they will, please, help build a road in rural India.
Sharma, meanwhile, is the new face of Indian trade politics - reticent to speak his mind, even when egged on by reporters - and his appearance this week on the coat-tails of the Prime Minister underscores how closely Singh is monitoring the informal talks that continue non-stop. India’s already signed a free trade agreement with South Korea, and with it’s neighbors in the ASEAN region. By 2010, it might sign one with the European Union. That’s a lot of ink in just a few months on the job.
But Singh speaks so rarely in public (the three public appearances in the last week notwithstanding) that any sense of direction from India’s perpetually smiling economist-in-chief is helpful guidance for the over-eager markets, at least. The benchmark 30-stock sensex was up 300 points for the day, almost 2%. Bonds fell, and given the headlines in Monday’s newspapers, Singh’s stock rose.