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Business Commentary / Ashok Mitra

The bear-eat-bull world

In the imperial days, the viceroy and the governor general used to do the chore. Following that blessed tradition, post-Independence India has got accustomed to a particular custom in high society.

The prime minister, sometimes the finance minister, would deign to address the annual meeting of this or that leading chamber of commerce and industry.

As part of the ritual, the president of the chamber would send across to the Prime Minister's Office or the finance minister's as the case would be, an advance copy of his welcome speech, beseeching government help in many areas.

The prime minister, or the finance minister, while addressing the chamber, would respond to the issues raised by it in general terms: a few of its prayers would be granted, some turned down with civility, while some others would not be referred to at all.

This year things are happening altogether differently. Annual meetings of industrial and trade confederations are coming thick and fast. On each such occasion, the two rituals -- the address by the chamber's principal functionary and the prime minister's or the finance minister's response to it -- are seemingly dovetailing into each other.

Or, rather, the prime minister or his finance minister appears to be transmitting the following message to the industrial and trade tycoons: oh noble lords, you need hardly bother to articulate at this august gathering what your outstanding concerns are. We, the government, are fully posted on them, your concerns are our concerns, your wishes are the government's very intimate wishes.

The prime minister or the finance minister thereafter proceeds to roll out a series of policy decisions intended to gladden the hearts of the select.

The Kamadhenu (cash cow) is not dead, it is alive and kicking. Companies will henceforth be allowed both to buy back their shares and to indulge in inter-corporate investments.

The Unit Trust of India will not be allowed to go under. Further drastic reforms in the financial sector will soon ensue to revive the sinking shares market.

"Creeping investment" will be permitted up to five per cent of equity. The insurance business will soon be handed over on a platter to private interests, with 26 per cent of shareholding reserved for foreigners.

Desperate situations call for desperate remedies. The UTI bubble is burst, there is panic in the stock exchanges, the bears are extraordinarily active, the global scenario is even more scary than here. The good government must step in at this juncture and play the role history has assigned to it.

Financial journals are most vocal demanding immediate public action. This is the same crowd that had, ever since 1991, been demanding the extermination of that abominable pest, the public sector from the nation's premises.

There must be no tinkering -- it had thundered -- with the purity of the free market, the government must disappear, pronto, from all spheres of economic activity. To have the government around was, according to these votaries of pristine capitalism, a crying shame: out, out, damned spot.

This same species is now singing a different tune. But then, in case you are a votary of pristine capitalism, you must not feel embarrassed at tying your self up in contradictions, your insensibility must be non pareil.

One financial journal has now carried a hectoring article on its editorial page. What is the wretched government waiting for, it must rush to assist the market, otherwise there is a real risk of everything collapsing around us; if that comes to that, the government must organise large-scale purchase of shares so that the bulls could once more take over; this was the priority, it must override all previously determined agendas of official action.

Ignore the irony encrusted in the protestation that only state intervention can save the free market forces from imminent disaster. It is the moral code guiding capitalist vanguards that is exceedingly more interesting. The government's number one task has to be the revival of the share market, the rest of the agenda can be dispatched to the wastepaper bin.

One third of the nation's population may be existing below the line of poverty; ameliorating their lot is not the primary function of the state.

Even after half a century of the benediction of Independence, almost one half of the population and nearly three quarters of the country's women are without letters, the government need not shell out funds to attend to their woes.

The nutritional deficiency amongst overwhelming sections of women and children are frightening beyond description. Here too, public initiative to remedy the situation can wait.

The tycoons are not worried over such piffling things as the spiralling of onion or vegetable oil prices. First things first, it is the government's bounden duty to concentrate on the share market and to restore to health the UTI as well as the non-banking financial companies.

Social conscience is a quality foreign to the Indian capitalist class. It is unable to ask itself how come several members of its fraternity succeeded so eminently in ruining hundreds of non-banking financial companies, reducing to penury hundreds of thousands of ordinary shareholders. It will employ no sleuths to find out where all the money looted from these institutions has gone.

It will not stop to make the query whether the ever rising quantum of non-performing assets of the commercial banks is at all attributable to the resolve on the part of affluent sections to consider it their birthright not to repay bank loans -- loans that provided them with the wherewithal to further add to their wealth.

Dog does not eat dog, not one amongst the capitalist class will have the courage to acknowledge the near-perfect correlation between the declining fortunes of the UTI and the dizzy heights of profit-gathering attained by a Bombay and Ahmedabad-based industrial family: the murky history of the UTI's foray into private placements and debenture purchases is widely known.

Some chapters of history, the citizenry will be primly told, deserve to be treated as confidential material.

Even as the moneyed segment of Indian society agitates over its particular concerns, there is a deepening and widening of the global economic crisis. These prim bodies, the World Bank and the International Monetary Fund, are themselves at a loss to explain the meaning of meaning.

But neither the local set of capitalists nor our ruling politicians in the country feel the need to keep abreast of what is happening in the big wide world. They are assuming that since the fund-bank duo has offered us belated kudos for not following fast enough and fully enough the script they had earlier written for us, long-term investment for our industry and infrastructure will soon start gushing in.

Ensconced in that conviction, they play their domestic games. From their point of view, the priority task they have earmarked for the government could not be more right. For if the bottom falls out of the share market, the comfortably placed upper middle class will face an extremely sticky wicket. That could create further complications for the profit taking of the tycoons.

The preliminary gestures on the part of the prime minister and the finance minister have not been able to shake the bourses out of their stupor. The poor prime minister and his equally poor finance minister, they must still be reading some dusty, early '90 capitalist classic that says stock exchanges hold the key to fast, faster, fastest economic growth.

They, it would appear, have yet to hear of the travails of Long Term Capital Management and the two geniuses of Nobel laureates who headed it.

This, the calendar says, is the year of Bertolt Brecht's birth centenary. Hate, according to Brecht, is a noble sentiment, it purifies society of the accumulation of stench the filthy capitalist class creates every day. Ridicule, Brecht added, is the best medium of the expression of hate. Shall we hate our sharemongers, or shall we put them up for ridicule? Perhaps we should do a bit of both.

Ashok Mitra

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