On July 6, finance minister Pranab Mukherjee presented the Union governments 2009-10 budget. It was a staid and sober effort, representative of the personality of the man himself. Its highlight was his focus on the governments determination to spend on projects targeting the poorest of the poor — the National Rural Employment Guarantee Scheme, Bharat Nirman and Sarva Shiksha Abhiyan (Education for All), among others. He clearly told Parliament that the government proposed to allocate significant revenue to these programmes, and warned upfront this would make a hole in the governments balance sheet.What he didnt say, and rightly, was what government will do to bridge the gap. The revenue details were included in the Presidents address to Parliament a few weeks before. In her address, which is a speech vetted by the cabinet, President Pratibha Patil spoke about disinvestment in public sector units, reforms in the foreign investment regime and various other plans the government has formulated to provide a big stimulus to stave off global recessionary trends. It made little sense, as Mukherjee said later, to repeat what was placed before Parliament earlier.
However, the media reacted with irrational pessimism as journalists and commentators went hammer and tongs at the government, prompting the stock market to tank. Judging from its reaction, the media responded to Budget 2009-10 in the manner of Chicken Little, the apocryphal bird who felt an acorn fall on her head. Alarmed, she assumed that the sky was falling and ran aflutter to tell the king. On the way, she met other subjects of the avian species and alarmed an excited flock. In the event, they didnt meet the king but bumped into a fox who made a meal of them all.
The impact of the media hype about a perfectly sensible budget was immediate and palpable. As the finance minister spoke in Parliament, hysterical media coverage and analyses on television and websites projected the speech as a throwback to the bad old days of socialism. The markets reacted instantly and indices went into a dive which resulted in investors losing billions of rupees. With no sense of irony, several political parties accused the government of not doing enough for the poor and disadvantaged. Mercifully, sanity has been restored following the governments efforts to calm things down. The media have also quieted down and moved on to their usual trivial stories, and the markets have regained a sense of balance.
In his presentation, finance minister Mukherjee did what many proponents of free markets have always demanded: reduced the budget speech into a dry recitation of the govern-ments spending and taxation plans for the next fiscal year. In no country is the budget a major media event or market mover. Only in India, do captains of industry appear on television with notebooks in hand jotting points as the finance minister speaks. Media hype feeds market hysteria. On July 6, the two combined to send stockmarket indices plummeting. Viewed in conjunction with similar exuberance with which the markets closed within minutes of opening on the Monday after declaration of the result of the general election on May 16, the message to the world was one of immaturity and instability.
Against this backdrop, is it any wonder that in the course of a single day after the budget was presented to Parliament, foreign portfolio managers pulled out more than Rs.1,400 crore from Indian equities? With its shrill media, obdurate opposition and speculative buzzards hovering over the economy, India cuts a sorry figure. Despite the fact that UPA-2 is the most stable government weve had in a decade, the world judges us as a composite of all the pillars and institutions of democracy.
When semi-literate reporters scream and shout out the news to wooden anchors; when the opposition in Parliament opposes everything irrationally; when speculators cause markets to seesaw perilously; when corrupt bureaucrats and politicians seek rents by causing delay; when businessmen cut corners to cheat and steal, it reflects poorly on the economy and the nation. As one of the worlds fastest growing economies, India is the cynosure of global eyes; it is regarded as an engine that will help power the world out of the current recession. Its every crease, wrinkle and nuance is under scrutiny. Therefore its time to stop behaving like bratty kids.
As such from the four estates of governance, only two, the executive and the judiciary, seem to have status that holds up in global forums. Politicians and journalists send the wrong message. They tend to be shrill, hollow and without substance, making a negative impact on society, culture and the economy, especially the capital markets. Above all, they feed off each other. As the media fly their tacky kites, politicians grab the string and manouevre news reports and analyses to gain advantage. Seen from the outside, Indian media and political parties seem malno-urished institutions, shrill and sycophantic, feudal and feral.
With just two legs to stand on, India appears unstable in the eyes of the world. Its not taken seriously because it doesnt take itself seriously. The unwarranted brouhaha over Budget 2009-10 is damning evidence.
(Rajiv Desai is president of Comma Consulting and a well-known Delhi-based columnist)
