Doom II: Trouble?

The worst performing currency in Asia. Ever increasing and uncontrollably high fiscal deficit. Inflation continually above 9% in all the months of the calendar year 2011. Eurozone simmering. Foreign Institutional Investors pulling out of India. Humongous current account deficit. World economy teetering. The worst performing stock market in the past year in the whole of Asia. Capital goods sector shrinking by a gigantic 25.5% portending doom. Stultifying policy paralysis. These, and more, are some of the terms that I hear even in my sleep these days. They are all around me. From my Macroeconomics lecture to the dinner table, from class presentations to late night hostel discussions, this topic rules the roost. No matter how much you want to run away, sometimes it gets difficult to tear your ears away from these numbing predictions. The sword of economic doom is dangling perniciously on the neck of the faltering elephant.  

The perception of the economic performance of a country, especially in foreign markets, is shaped primarily by the level of its political stability. Assertiveness towards change is what the government of India lacks right now. If the Congress Party fails to win a lot of seats in the upcoming Assembly elections, it would have to depend heavily on its whimsical partners to garner the support needed to stand on its broken legs. If such a scenario turns up, forget about any reforms. The future sessions of the Parliament would be a repeat of the laughably depressing winter session, whose proceedings were some sight. Only a favourable result for the Congress party could give enough legroom for the party to make the train of reforms atleast start moving. The Assembly elections are important also because it would make or break the plans that the Family has for its “young” scion. Whether Rahul Gandhi’s attacking tactics can make a dent in Mayawati’s big plans is anyone’s guess. Meanwhile, B-school students can only sit down and pray. 

Fear and pessimism is written all across the faces I see. Doom splashes in the ocean of their eyes. The possibility of poor final placements by the end of the next year scrapes our soul. But then half-glass-full-me steps in. Did I scare the wit out of you? Of course I was exaggerating! The main driver of inflation – food inflation has fallen to a six-year low, Eurozone may finally extricate itself out of the morass, US economy seems to be improving, and car sales finally up. These and some other leading indicators are giving a glimpse of the light at the end of the long dark tunnel. But for the light to come true, I guess I better pull myself away from the web of words and start preparing for the quiz I have tomorrow!