'The one-eyed king and the land of big hearts'

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http://www.livemint.com/Opinion/JhxD795BzSLVERNOni7uyI/The-oneeyed-king-and-the-land-of-big-hearts.html

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Date: Thu, 21 Apr 2016 18:37:28 +0530
From: Venkatraman Anantha Nageswaran <jeev...@gmail.com>
Subject: 'The one-eyed king and the land of big hearts'

http://www.livemint.com/Opinion/JhxD795BzSLVERNOni7uyI/The-oneeyed-king-and-the-land-of-big-hearts.html

Thu, Apr 21 2016. 06 10 PM IST

The one-eyed king and the land of big hearts

Political, business and thought leaders should take care to ensure
that society does not become the land of the blind-hearted

The statement by RBI governor Raghuram Rajan was a relative statement
about the economy in comparison to the rest of the world economy and
he was right about it

I touched down in India on Tuesday to soak in the Indian summer at
least for a week, from Chennai to Delhi with Coimbatore and Jaipur
thrown in for additional effects. Until I met with a good friend on
Tuesday evening, I had not realised that the governor of the Reserve
Bank of India Raghuram Rajan had ruffled a few feathers again. My
friend too was upset about the remark that the governor had made,
referring to the Indian economy as a one-eyed king in the world of the
blind. Until he told me that, I had not felt anything was untoward or
wrong about the message. I listened to him politely and left.

On Wednesday morning, I was on a flight to Coimbatore. My co-passenger
had diligently collected so many newspapers that it was easy for me to
catch up with all the things that were making the headlines in India.
Almost all newspapers had correctly led with the story of the drought
in ten states with about 330 million Indians affected. However, there
have also been stories of how the government was not pleased with the
remark that the RBI governor had made. The minister for commerce had
suggested that the RBI governor choose his metaphors carefully.
Apparently, with his own brand of toxic mischief, Mani Shankar Aiyar
had queried as to who the one-eyed king was. Looks like, in the
scorching Indian summer, more than prickly heat, prickly hearts are
the problem.

The statement by the RBI governor was a relative statement about the
economy in comparison to the rest of the world economy and he was
right about it. In the past, especially in the 2004-07 period India
used to crow so much about its rapid economic growth that it was
embarrassing for many of us who felt that it was not sustainable. It
turned out that way. The economy is yet to recover from the fallout of
how it grew in that period. Now, India is growing again but there are
some still reasonable doubts about the growth statistics.

In the past, the RBI governor had commented on government’s policies
such as ‘Make in India’ in public. This columnist too had noted that
such policy advice was more effectively rendered in private than in
public. Also, his reference to how most things worked well in Hitler’s
Germany was liable to be misinterpreted and it was. However, two
factors have to be kept in mind.

One is that the governor is a public intellectual who does express his
views on many aspects of public policy – both domestic and global. In
a public lecture in Basel in June 2013, he said that international
bankers had a reputation between a conman and a pimp. In another
lecture in 2014 at the Brookings Institution, he took on the Western
central banks for their monetary policies calling them out for
stealthily depreciating their exchange rates. In fact, after the
recent RBI monetary policy meeting, in an interview to Bloomberg
television, he had said that central banks in advanced countries would
take their Quantitative Easing (QE) policies to QE infinity. He also
said that it was not right for them to scale back their plans to
normalise their interest rates every time the stock market wobbled.
Incidentally, some of these comments against Western institutions and
markets expose the ridiculous perception in some quarters that he is
out to curry favour with the West at the expense of India! Back home
in India, he had commented on industrialists defaulting on loans and
living lavishly. He had pushed banks to come clean with their bad
loans. He is an ‘equal opportunity offender’ but with a purpose.

That actually brings us to our second factor. It is one thing to take
offence when government policies are criticised publicly by officials
who are part of the government but it is another thing to expect
everyone to be a cheerleader for the government and the country. This
government rightly took credit for strengthening the federal framework
by devolving substantial resources as per the Fourteenth Finance
Commission recommendations. It followed it up in this year’s budget
with devolution to local governments. These things strengthen the
institutional foundations of the democracy. Similarly, it should
boldly announce that it would expect, encourage and empower (as the
case may be) the Chief Economic Advisor, the Vice-Chairman of NITI
Aayog and the RBI governor to act as ‘risk managers’ and ‘devil’s
advocates’ for the government. Among other things, their roles should
be to ask questions, explode myths and puncture halos. The government
should be grateful for the respectable voices from within that warn
about risks and caution against disproportionate euphoria. The great
Tamil saint Thiruvalluvar has said that such a government cannot be
defeated by any enemy.

The economy may be a one-eyed king. But, political, business and
thought leaders should take care to ensure that the society does not
become the land of the blind-hearted. For its own sake and the
country, the government should set an example to make India a land of
big hearts.