Global trends now unfolding have a major influence on our social and political realities. Not of course in terms of the rather silly charges of conspiracy and the hidden foreign hand but in a deeper more structural sense. Hazare’s movement, aided and abetted unwittingly by the ruling establishment, has pushed all other burning issues to the background and now threatens to wipe out the monsoon session of India’s Parliament. This is, indeed, a great pity. The hope was that this parliamentary session would be used for pushing forward the slew of important legislation which is long overdue. This is the only way to reverse the perception of policy drift in India and help get the economy back on a high-growth track.
The real cost of political turmoil is ultimately borne by the people, whose livelihoods are destroyed by it. The industry, with its focus on the threat to global competitiveness due to avoidable uncertainty and loss of production, has a direct interest in ending the stand-off.
India should at this time be making extra efforts to ensure that its domestic investment climate remains attractive, its institutions are seen as robust and accountable, and social and political stability is maintained. Those who have delusions of creating a Tahrir Square in Delhi are doing the nation grievous disservice. The global economic and political situation is ominous. Stock markets all over the world, including in India, reflect extreme nervousness about short-term prospects both in Europe and the US. These two economies, which account for nearly half of global output, are spluttering and in real danger of grinding to a halt. Nearly a quarter of the young population in major European countries is presently under-employed or unemployed and in the US long-term structural unemployment is close to a fifth of the working population. These are frightening numbers in countries which are not accustomed to such sharp divides within their populations.
Europe with its under-capitalised banks, stubborn fiscal deficits, rising public debts, ageing populations, slowing growth and widening political divisions is virtually on the edge of a calamitous precipice. The US recovery has pretty much ground to a halt and the expenditure cuts forced by the belligerent right wing of the Republican Party will not help matters. Housing prices remain stuck at their lowest since the Lehman crisis and fears of a double-dip recession are now more widespread than ever before. The worst prognostications, by the indefatigable Paul Krugman, seem to be coming true. But not only are his recommendations for greater public expenditure ignored, the Tea Party stalwarts are forcing cuts when they will hurt the most. The downgrading of US debt, stagnant consumer spending, persistent unemployment, and massive slowdown in corporate investment have stymied prospects of a quick and robust US recovery. All this does not bode well for the US economy which may get worse before it gets any better. With the trans-Atlantic economies barely keeping their heads above water, the centre of gravity of global economic activity, investors’ attention and job seekers’ searches, inexorably focus on Asia — including South Asia and India.
These global trends are directly and strongly related to Anna Hazare’s movement. With dimming economic prospects in the West, investors are looking with greater interest at investment prospects in emerging economies like India. This translates into demand for, and greater pressure on, achieving more transparency in rules and procedures that affect investment. India is just beginning to realise the higher governance requirements of attracting greater volumes of FDI into the country.
More importantly, the Indian elite no longer has the scapegoats abroad permitting them to ignore the corrupt, dysfunctional and over-bureaucratised governance systems at home. They have finally focused on the need to get things right at home. Indian industry, having expanded, globalised and become more exposed to best international practice over the past two decades since liberalisation also speaks more freely and cogently against corruption and crony behaviour.
The global explosion in information and social networking has taken firm root and blossomed in India. Facebook, Twitter and the internet are all global phenomena that have been successfully Indianised. The middle class now has unprecedented means to express its frustrations and mobilise public opinion around its interests.
All these factors, directly and intrinsically linked to globalisation, strengthen and reinforce Anna Hazare’s movement. Rooting out corruption and the generation of private rents from public patronage requires systemic change — not merely a single bill as the protestors demand, howsoever well it may be crafted.
Rajiv Kumar is the Secretary General of the Federation of India’s Chambers of Commerce and Industry.