Capital in crisis

George Monbiot, the author of Feral, avers that everyone wants everything. The promise of economic growth is that the poor can live like the rich and the rich can live like the oligarchs. He is not far from the truth when he holds that progress is measured by the speed at which we destroy things that are meant to sustain this earth. Yet, growth is a political imperative thus compelling capital to fuel the imperative. Asset building is a part of this economic activity, where the end-use provides revenues which, in turn, after meeting the expenses, goes into accumulation for further asset addition. The cycle goes on around the world and many players from governments to individual enterprises and individuals are an active part of this wealth extraction.

The good part of wealth creation often comes with the bad. In fact, so much more is this collateral bad, that it subsumes all of the good and it is the bad that becomes universal. So also is it with capitalism. The interplay of capital and labour has degenerated into the exploitation of the latter, over the longest time, but that is another story. The most degenerative part has been the phenomenal growth of the 'crony capitalism', that has not only put the entire financial architecture at the risk of a disastrous meltdown but has also nurtured a politico-business nexus that compromises the integrity of governance across nations and has eroded all forms of democratic practices and values. It is no longer about everyone wanting everything as per Monbiot, but it is about one or just a small set of people wanting everything and then holding their political system to manipulation.

The serial gaming of the financial systems and institutions is showing consequences. The crisis in the economy has begun to unfold. Mounting non-performing assets, cost overruns and delays in completing projects, misuse of legal recourse to defeat contractual obligations between Indian and foreign corporates and policy misadventures have all hurt our growth. Money and prosperity thrive only in a rule-bound environment and it will conform to the dynamics of markets. True, political compulsions and humane needs demand that the disadvantaged are cared for but that expense for the caring has to be met through appropriating revenues in a transparent manner towards such objectives. Every time a service is created, it carries a cost and the same has to be borne by the treasury. This cannot ever be forgotten for any public body's performance and nor can the costs be defrayed by printing currency. Never ever should this even be thought of, as this is the unpaved road to ruins. Capital has a cost and will fulfil its intrinsic role only if it is productively deployed.

The economy of a country has to be built on principles and its ethics have to be honestly and sincerely adhered to. Playing ducks and drakes with canons of finance is a short term game which will rebound with adverse consequences like bank failures, industry stagnations and resultant individual privations. Below value collaterals, doctored appraisals of project costs, loan dispersals against diving goodwills, etc., mercurial fiscal regimes, notional disinvestment policies, all will come home to roost someday. Is that day now or later, remains to be seen. Inflated taxation demands locked in contention for long years, corporate dispute resolutions taking endless time are all converging to make our economic slowdown worse than ever before. One cannot but help the feeling that we made most of the contribution to the state of our current woes. Everything points to say that day is now.

The ecosystem of governance is sending out signals of alarm. In fact, it is the bells tolling in continuous peals that the economy needs immediate rescue acts. There is a whole chorus of voices out there advocating reforms of one kind or another. Tax concessions for one sector, lowering of GST for another, subsidies for yet another sector, easing liquidity for everyone, there is a whole gamut of suggestions pouring in on a daily basis but what we need is the coherence of policy initiatives. This coherence has to be underwritten by the integrity of the process, irrespective of the results that show up. Our collective efforts to manage results of the economy to merely show great spectacles will not endure beyond the temporary. Sustainability, however, needs ethical purpose and ethical means. That is real progress.

(The views expressed are strictly personal)