PM's punditry at G20 is just the roar of an economic mouse

When one’s beard is on fire, it is folly to ask for a matchstick to light one’s bidi.

The irony of Prime Minister Manmohan Singh giving gratuitous advice on economic crisis management to equally clueless European leaders at the ongoing G20 summit would be comical if it were not so tragic. Here is a man under whose watch the macro fundamentals of the Indian economy have gone awry in recent years, whose own government hasn’t been able to muster up the courage to undertake the feeblest of economic reforms at home, and whose inability to exercise his first-among-equals authority over his coalition partners has rendered him open to political blackmail every few days.

[caption id=“attachment_349761” align=“alignright” width=“380” caption=“Action, not empty rhetoric.”]  [/caption]

And yet, there he is, offering easily digestible capsules of economic wisdom to - and demanding “tough decisions” from - leaders of an equally dysfunctional union of disparate states who have managed thus far to run their own economies into the ground without any help from worthy men of economic wisdom from faraway lands.

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The sense of disconnect between Manmohan Singh’s pontificating abroad and his incapacity to get things moving at home is representative of the mindset of his entire policymaking team. A few flashy years of entirely fortuitous 9 percent GDP growth and the breathless chatter among the international commentariat about the BRICS economies appear to have fed their hubris - to the point where today they refuse to acknowledge any merit in the reasoned criticism of their mis-steps in recent times.

And as validation of their effectiveness, they point out that despite the sharp slowdown in GDP growth rates, India continues to vastly outpace most of the developed economies. Even at 6 percent, India’s growth rate would be the envy of much of the world, they trumpet.

But this characterisation ignores the fact that for a country of a billion-plus people, with the kind of infrastructural deficits that India has, its failure to grow consistently at anything less than 9 percent without stoking double-digit inflation counts as underperformance of a very high order. And given the enormous developmental challenges and mass deprivation that India faces, every percentage point of slowdown translates into a lost opportunity to lift millions out of poverty.

If anything, the Manmohan Singh government has a lesson or two to learn from the eurozone implosion, particularly, the folly of living beyond one’s means, of not implementing tough reforms in good times, and of setting up unserviceable “social security” nets which become a crushing burden when the tide turns and growth slows down.

The spending binge of successive UPA governments, which has played havoc with the macro fundamentals, is effectively directed at building a first-world social security net on top of a third-world (even if growing) economy. And, as has been made clear in recent times, it’s come at the cost of growth, thereby effectively sacrificing the one factor that would have, over time, made social spending of this magnitude sustainable.

The fact of it is that a developed world starved for economic growth, and completely out of ammunition to revive itself, is increasingly looking to emerging economies for investment opportunities. Yet, by putting reforms into deep freeze at home, and effectively bludgeoning investors with regressive taxation proposals, the Manmohan Singh government has turned foreign moneybags away from India.

Rather than offer well-meant homilies to European leaders, Manmohan Singh’s energies could be better expended in cranking up policymaking at home. It appears that with Pranab Mukherjee’s imminent exit from the Finance Ministry (as he prepares to become President), Manmohan Singh will himself take direct charge of the Ministry.He will do India - and the world - a world of good if he could use this opportunity to summon up the reforming instinct (or what’s left of it) in him, and propel the economy back to a high-growth orbit.

An ounce of action is worth more than a pound of hot air. If Manmohan Singh can do this, he will have shown by example the merits of taking tough reforms.In the absence of that, his well-meant advice, which leaders listen to with civil grace, only amounts to the exertions of a mouse that roared.