Two friends sent me the link to the interview conducted by Mr. Prannoy Roy on NDTV with Ruchir Sharma of Morgan Stanley and Dr. Arun Shourie. For people who do not follow these things on a daily basis, it might have been a useful one to watch.
I have the following observations to make on Mr. Roy’s remarks in that discussion:
(1) He countered Dr. Shourie who said that the Food Security Bill must be dropped. He said that it was meant for the ‘poorest of the poor’. Really? Two-thirds of India are the ‘poorest of the poor’? If he had said that not just the Food Security Bill, many corporate tax give-aways should also be examined afresh, then that would have been a better point to make.
(2) Despite enough slides and charts on display, Mr. Roy insisted on calling the India economic crisis a 50-50 mix of global and home-grown factors. That is simply not true. Not all emerging economies are hurting. Those who splurged (lived beyond their means) – either in the private sector or in the public sector or both – are hurting. The causal factors are 100% to 200% home-grown.
Read the piece by Mihir Sharma in today’s Business Standard. It is disinformation. It is not a crisis of all emerging markets. It is a crisis only for those emerging economies that lived beyond their means. Further, Indonesia and Brazil had massive real exchange rate appreciation in the last few years and hence their currency weakness is not the same as that of India. Check out my article in Pragati on the performance of Emerging market currencies since the global crisis began in July 2008 and since the recovery began in March 2009.
Mr. Sharma cites Krugman. We normally cite reputed academics for their knowledge and not for their ignorance. If Krugman did not have his facts on India, we should educate him and not cite him.
(3) Mr. Roy insisted on calling Dr. MMS, Dr. Ahluwalia and Mr. Chidambaram, the ‘dream-team’. Of the three, only Mr. Chidambaram dared to think boldly on his own in 1997. But, that is now very distant memory.
Dr. Singh implemented the blueprint, under the political cover of the then Prime Minister, Mr. Narasimha Rao, agreed to by Mr. Yashwant Sinha and Mr. Chandrasekhar with the IMF.