The Usual Suspects

India Today
September 14, 1998

THE USUAL SUSPECTS
Good Times, Bad Times

A good Indian is always less of an Indian

Swapan Dasgupta

A year after Britain was engulfed by hysteria over the death of Diana, Princess of Wales, there is another knee-jerk reaction that is in evidence. This time, mercifully, it has nothing to do with the future of stolid institutions like the monarchy and cricket, which have greater resilience than the stock markets. The tension is over the future of western capitalism. So much so that this year's wonderful summer is being compared to the one in 1939. "Enjoy the day of wine and roses," wrote a prophet of doom in The Daily Telegraph, "for they will soon be exchanged for sackcloth and ashes. We are drawing close to the corner around which bad times darkly loom."

This may sound strange in an India that is gloating over the success of its Resurgent India Bonds (RIB) -- a success that makes Finance Minister Yashwant Sinha dream of a glorious September. Perhaps Sinha's optimism would have been greater had he known the corpus of the RIB is roughly the same as the losses suffered by international bankers on account of the Russian economy going into a tailspin. However, when you consider George Soros alone lost $2 billion in Russia, the Indian achievement doesn't look all that awesome. In the world of capitalism, India is a bit player.

That, of course, is one facet of the problem. More worrying is the growing mood of insularity in the West. After the Mexican crisis of 1994, the Asian crisis earlier this year and the Russian collapse now, "emerging markets" is rapidly turning into a snarl phrase for the discerning investor. Capitalism presupposes a set of rules that goes beyond merely facilitating making a quick buck. The belief is that those rules are adhered to only in the European Union and the US. In the rest of the world, buccaneer capitalism prevails.

This may well be an exaggeration, but matters are hardly helped when our finance minister -- instead of admitting we are indeed a sick economy -- pretends there will be nothing to worry about after September. India hasn't really faced a recession in living memory. Therefore, neither industry nor the Government is mentally tuned to coping with it. Consequently, the Centre falls back on tired solutions such as increased public spending. The political class lacks the ability to bolster our self-defences by undertaking institutional reforms. That's too much hard work and too long a vision for comfort. So it is tempting to pretend that a global crisis will leave us relatively unaffected.

It won't. If you were a western investor, you wouldn't put your money into the emerging markets. It's far too risky. You would look for stability and reassurance. You would look to London and New York, not Moscow and Delhi. Unless, of course, you were convinced that India is truly different. If India itself is not convinced of its own rectitude, what chance the centres of world capitalism?

The solution does not lie in shutting ourselves off and revelling in our uniqueness as the Swadeshi Jagran Manch proposes. To prosper, we have to be less of "us" and more of "them". Being a good Indian now involves thinking less of how it's done here and more of how it's done in London and New York. Their fundamentals are right, ours are wrong. We can be big by first admitting we are small.

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