He is an economist, but he is a politician, too. So when he says that the Indian economy is staring at doomsday, is Swamy being the responsible Indian by sending early warning signals to the caretakers of the Indian economy, or is there a more deep-rooted angle to the red flag he has raised?
By forecasting an imminent crash between this November and February, 2016, Swamy could be trying to stain RBI Governor Raghuram Rajan’s report card, many market experts have suggested. If there is a threat of the economy collapsing under Rajan’s watch, it’s likely that the axe would fall on him.
The maverick Bharatiya Janata Party leader implored the Prime Minister to instruct the Reserve Bank of India Governor to either cut interest rates, or face sacking.
Swamy wrote: “Based on my reading of the various indicators of Indian economy, I feel compelled to inform you that the economy is in its early phase of a tailspin. If curative measures are not taken then a major crash is inevitable between the coming November and February, 2016.”
He even tweeted: “PM must make clear to RBI Gov: Rate cut now or Rajan cut right away”. He even offered quite a few recommendations aimed at resurrecting the economy.
But why is Swamy making it personal? Because otherwise, it doesn’t make much sense to go after an entirely capable economist. Rajan had pointed out in August that the Central Bank had cut interest rates thrice in the year and were still willing to take it down furthermore. Had Rajan been resisting the rate cut, Swamy’s outburst would have made some sense, at least. But cutting interest rates is not a contentious matter.
Swamy is going out of his way to invoke Modi’s attention, to feed him with data that manifests a fragile economy, headed for disastrous crash.
Economists inform that we don’t look as bad as many other currencies. In fact, we have strengthened quite a bit over the last year-and-a-half because of the nearly 20 per cent depreciation of the euro. Similar is the case with the rupee and the yen. The stock markets in China, and much of the rest of the world, appears to have calmed down in September after the turmoil of August. A slowdown in the Chinese economy isn’t really a bad thing actually, when you consider that Modi is trying to lure manufacturers with his ‘Make in India’ pitch.
Market experts believe India is not as vulnerable to external shocks as many other Asian countries, as exports are a relatively lower share of total GDP than many east Asian countries such as South Korea, Thailand or Malaysia.
In such a light, Swamy’s radical statement could be seen simply as an attempt to steer the hornet’s nest, create a situation of negativity around Rajan’s domain, and make him seem liable for the imminent crash.
Swamy, and the BJP, should remember that Congress lost power in 2014 because of its inability to arrest inflation. The government should take the corrective measures as outlined by the RBI Governor and the likes, but Dr Swamy’s assessment cannot be ignored just because, besides being an economist in his own right, he also dons a politician’s hat.