Govt. auditor CAG has lobbed not one but three bombshells by submitting reports related to Coal block allocation, allocation of UMPP projects and Delhi airport development, putting the combined notional loss at over Rs.3,00,000 crore. The negative reaction of the press and the opposition to the reports has pushed the economy in the grip of a major crisis. The extent of damage these reports can inflict on the health of the economy is unprecedented. The basis of fixing the notional loss itself is fraught with grave consequences for the future of Indian economy. The voices of cancellation of the entire coal blocks allocated by UPA II can send shock waves for the investment climate in the country. It is like pushing the country back to the dark socialist era where private enterprise was treated as a curse for the economy. The GDP growth rate which has already slipped to 5.5% for the first quarter of FY 12-13 can slip below 5% if the current logjam is not resolved with a sense of urgency. The captains of Indian industry led by Deepak Parikh have expressed anguish at the current state of affairs.
I have a feeling that CAG and the main opposition party BJP will have to share the blame for pushing the country towards anarchy. History will never forgive them for the blunders committed by them. CAG on its part has presented an unrealistic view of the situation by sensationalising the figures quoted by them. Development of the country has a cost but the cost has to be calculated realistically. How can we auction a scarce commodity like coal which is the main input for producing power for a power deficient country like India. Can anyone imagine the price of a unit of electric power if the coal blocks are auctioned as per the figures put out by CAG. Will the people of this country be able to meet the increased price of power? CAG has also failed to appreciate the difference between an administrative decision of coal block allocation and the criminal nexus between govt. officials/ ministers and the private sector mining companies. The law of land is strong enough to punish such criminal nexus. Media should also focus only on such criminal acts and refrain from painting the entire picture as ugly. CAG has also woven a web of controversy around one of the best examples of PPP- Delhi International airport (DIAL). Does CAG want to say that we Indians do not deserve any world class projects!
The role of the principal opposition party BJP is even more circumspect. It has failed to uphold the basic tenets of parliamentary democracy leaving the parliament paralysed for several days and weeks. The cost of running the parliament for one day comes to Rs.2 crores. Can BJP tell this country who is going to bear this cost. In the bargain BJP is fast losing its credibility in public and may loose the status of the principle opposition party in the next election. BJP is primarily responsible for making mockery of the system. Its top leader L.K. Advani has already conceded defeat by tweeting that Third front will form the next Govt. at the centre, and both Congress and BJP will bite the dust in the next elections. I am afraid the time is running out for both the Govt. and the opposition to rescue the country from the mess that the political class has created. People of the country are losing their patience and the consumer confidence is touching new lows. Our politicians must rise above partisan politics to salvage the dwindling image of the country, before it is too late.
Even in such circumstances our equity and commodity markets have been holding on steadfastly. Gold and Silver have touched new highs due to easy liquidity being pumped by the western economies. The markets will definitely react to the political crisis in India. But the chances of a major fall is ruled out. The new range for our equity market would be between 5100-5800 on the Nifty till the end of the year. Any dip in equity prices should be considered as an opportunity to invest for long term. Luckily for our economy the monsoon has revived smartly in August and the rural demand is robust. Fall in consumer prices will be the major trigger for easing of interest rates by October end. The signals from nature and world markets are extremely positive, provided CAG and BJP can do some soul searching to help revive the fortunes of our economy.
