An insensitive index
OOMMEN A. NINAN
Political India must sensitise corporate India to the social environment in which its profit-driven enterprises are staged.
Booming economy: But what about the life of the ordinary Indian? Photo: REUTERS
INDIA sank under the fury of nature and the burden of human misjudgement during 2005, but the Indian economy continued to boom, if the stock market indices and corporate profits are any indication. The index of human empowerment shows India in very poor light. On the other hand, the Sensex, the Bombay Stock Exchange's Sensitive Index, is all set to touch the 10,000 mark.
Which benchmark portrays the reality more accurately? Corporate India's performance did not shine during last year's tragic chaos.
The worst example was the Mumbai deluge. The power breakdown during the flooding and the prolonged inability of the concerned agency to restore power in India's commercial capital, showed what a bad idea it had been to cede a public utility like power distribution to the private sector. And after the deluge, private insurance companies decided that too much damage had taken place too soon for too many: this callousness represents the greed of corporates that fix their sights on the upward graph of stock-value movements, to the exclusion of human loss.
There is no doubt that India's financial markets have become vibrant as they have deepened and widened. But the greed of investors, both individual and institutional, has resulted in the manipulation of stock markets, especially in the initial public offerings of corporates, which have provoked a mad rush recently. The capital market regulator recently identified many individuals and institutions involved in manipulation, using benami names to corner large chunks of shares. The recent upgradation of the market infrastructure and institutional framework could not stop 'systemic failure' in the financial markets.
The Indian economy is certainly growing at an unprecedented rate of 7 to 7.5 per cent. The Indian equity market alone appreciated by 43 per cent (this year's US$10.4 billion is a record compared to US$ 8.5 billion last calendar year). Experts predict that Indian markets will be the biggest gainers among the emerging market economies in 2006. The government also expects a massive foreign direct investment (FDI) in 2006. The telecom and information technology sectors alone are expected to attract US$ 22 billion, besides US$ 25 billion in the steel sector.
The other side
But all is not rosy on the ground. The life of the ordinary Indian has not improved. India's farmers are suffering. The Congress-led government's Common Minimum Programme (CMP) has been acclaimed as a humanist programme and the Union budget has urged banks and other financial institutions to support small-scale industries and micro-finance and micro-insurance schemes. But these gestures have not stopped farmers from committing suicide to escape neck-deep debt. And on many occasions, political strong-arm tactics have been required to control the bull, with the Left parties tilting the equation towards a compassionate economic policy.
Speaking as Finance Minister to economists at the Indira Gandhi Institute of Development Research many years ago, Manmohan Singh, architect of India's economic reforms, compared India's economic reforms to a pyramid. The private sector, he said, would look after the upper layers, while the government would take care of the lower strata. As Prime Minister, can Dr Singh deliver on this vision? Political India must sensitise corporate India to the social environment in which its profit-driven enterprises are staged.
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