By Tensing Rodrigues
CRISIL’s assessment of Budget 2020 as reported by most of the newspapers is crisp, “Budget measures too long term, unlikely to meet growth targets in FY21.” Though I did not find that sentence in the CRISIL report itself, nothing could be more appropriate.
I do not mean to say that CRISIL’s take on the budget is appropriate, but the caption is appropriate to the popular clamour. The majority of the taxpayers seem to be wanting just that: A quick solution to the economy’s woes by FY21, for in future we will all be dead, to borrow a phrase from John Maynard Keynes.
Well, post 1930s that has been the dominant ideology globally. President Roosevelt launched the new deal between 1933 and 1939 to get the US out of the depression. New deal meant pumping money into the hands of the people so that they spend more so that the demand grows, production grows, more jobs are created thereby, more money gets into the hands of the people, and so on in a virtuous cycle.
Keynes theory was not just economics. It also reflected the emergent hedonistic philosophy, eat, drink, and be merry, for tomorrow we die. Keyne’s prescription apparently did work but in a rather wicked way. Paying workers to dig up trenches and fill them up the next day could not go very far perhaps that would have turned the entire US into a warfront. But yes what saved the US from a permanent ghost of depression hovering over the economy was a series of wars almost into the 21st century. And when the war engine lost its steam US went into a depression once again. Companies going bankrupt, mass lay-offs, the economy shrinking, that culminated in the 2008 financial crisis. Then it was once again Keyne’s prescription- now called the quantitative easing.
I see essentially two places where we seem to be going wrong well, I may be wrong. Therefore I leave it to your judgment. But let me first say what I feel. One we seem to be in a hurry. We seem to be wanting instant gratification. We are not ready to wait for the tree to grow to yield so we do not want to plant the tree. We want to buy the mangoes from the market. Two, we seem to be forgetting that there cannot be gain without pain that there is some necessary pain of growing up.
We have not reached where we are without the growth pangs of 60s, 70s, … and 90’s and that journey was not without pain. Those born later may not know what it was like but they cannot afford to assume it away. And then we decided to invite more pain for a better future. The reforms might have felt like a whiff of fresh air it did make us feel instantly nice. But that was just the beginning if the reforms are to continue, we have to face the inherent pain. Inefficient businesses have to close down. They cannot be kept on life support with subsidies or state largesse. We cannot cry for the lost jobs.
Reforms means subjecting ourselves to a higher level of discipline, a higher level of transparency and a higher level of diligence. We cannot scream when that pains. If we are unable to inflict a higher level of discipline, transparency and diligence on ourselves then we have no right to complain. That others are doing it and are going scot free is no good excuse for us to wallow in the old muck. The reforms have to begin with ourselves for that will give us the power to exact higher discipline, transparency and diligence from others.
If our goal remains the growth rate in 202-21 that is where we will end because if we believe that in the future we are all dead then we are already dead. The history will simply leave us behind and move ahead. But if we set our goals beyond the immediate we will definitely reach there. When your grandfather planted that coconut tree he knew well that he will most probably not live to eat its coconuts nevertheless he took the pain. That is what is called the vision.
The lesson of the story is simple. Let us not measure our growth with the change in GDP year after year. Let us measure it in terms of solidity of our financial institutions. Let us measure it in terms of the opportunities that the economy offers to our youth. Let us measure it in terms of confidence that we feel to invest in a business. And be ready to pay for it with whatever it asks for. It is futile to look at the government as the government is a puppet that merely plays to our tune.
If we want instant gratification it will do everything to give us instant gratification or else it will have to go. If we are looking for long term development it will work for that or else it will have to go. And it is up to us to see to it that it goes. If it does not it’s because we are hypocrites.
*The author is an investment consultant. Readers can send their comments and queries to firstname.lastname@example.org