Friday, September 18, 2009

Please get real about China

It is very rare for top Indian politicians holding important positions in government to bell the cat when it comes to China. When it comes to dealing with the dragon, the Indian tiger prefers to metamorphose into an ostrich. So what George Fernandes (then Defence Minister) and Atal Bihari Vajpayee (then Prime Minister) said and wrote about China more than 10 years ago is actually a historical milestone in India’s strategic posturing. Defending the nuclear tests, both had cited China, rather than traditional foe Pakistan, as the real strategic threat to India. That brave departure from traditional meekness and whining soon melted away and was replaced by the usual “let’s not off end China” stance. This strategic confusion is painfully clear now as sections of Indian media go ballistic with reports of Chinese belligerence while our policy establishment tries damned hard to play things down.

Sure: this columnist is a neophyte compared to the myriad pundits who ponder, pontificate and preach over China. But like an ignoramus, let me ask two simple questions and frame them in a language that you and I can comprehend. First: Is China a strategic threat to India? Second: Can India do anything about it? If strategic threat means that Chinese troops will thunder down the Himalayas and capture Ladakh and Arunanchal Pradesh in a swift blitzkrieg before ponderous India can react, then that is indulging in fantasy. Mind you, as things stand today, the Chinese military can actually pulverize India – just as it did back in 1962. It is a different matter that party bosses sitting in Beijing will not take that decision since the ‘opportunity costs’ will be unacceptably high. So if there is no immediate military danger, how is China a strategic threat?

It really boils down to common sense. You cannot have two ‘dadas’ in a neighbourhood. As of today, China is the undisputable dada of Asia and will go to any extent (short of a nuclear attack or a military strike) to prevent India from emerging as a rival dada. Do remember, the real dada in this is America and it will go to any extent to ensure its dadagiri is unchallenged. When you see things from this folksy perspective, you understand why China props up the Pakistani military and why it is ‘investing’ in strategic bases across the Indian Ocean, East Asia and Central Asia. And yes, this dadagiri is not about ego. It is about getting a lock on energy resources. If push comes to shove, the dragon can even reluctantly go for a small military adventure to show India who the real dada is.

Can India do anything? For one, it should not be obsessed with China and the threat it poses. Obsession of any kind is bad; just ask Pakistan where its obsession with India has taken it. The only choice for India is to grow as fast as possible over the next two decades. A high and sustained rate of growth will do two things: it will prompt countries who don’t like China as a hyper power to look at India as a ‘credible’ ally; more important, a rapid rate of growth can enable India to invest heavily in the military. The world respects both economic and military might. It laughs at ostriches and cry babies.


Friday, September 4, 2009

Finally, some really real good news!

For almost nine months, I have been waiting for this single press release even as two pundits offered five opinions on when India will emerge out of the latest 'recession' (Ask the pundits how a 6% plus GDP growth rate can be categorised as recession!). Even in July, 2009, when it was reported that industrial growth grew at an unexpected 7% or so, I had my doubts. Even when the Prime Minister, the Finance Minister, the RBI and sundry other oracles pronounced that the bad times are finally over, I was sceptical. And yes, even when the automobile industry reported higher sales of two wheelers and cars month after month since January, 2009, I wasn't very sure. But finally, a press release of September 2, 2009 has cleared all my doubts and I can add my two bit of pseudo-wisdom and say decisively that the bad times are finally over. For the second consecutive month, Tata Motors has reported a positive growth in the sales of medium and heavy commercial vehicles. In July, 2009, they grew at a modest 5.5%. And in August, 2009, they have registered an almost double digit growth rate of 9.6%. Yes, I am talking about the sale of trucks – the mini and maxi monsters of Indian roads that carry two thirds of goods transported across India. Don't ask me to explain the esoteric theory and jargon of how a growth rate in truck sales means that the Indian economy is back on track. It is. Suffice to say that when businessmen buy more trucks, they are confident that more goods will be produced, transported and sold across the country. Equally important, when businessmen buy more trucks, it means that banks and financial institutions have again started lending money to them (Even billionaires don't buy trucks by paying cash down). Even during the last two 'recessions' – after the East Asian meltdown of 1997 and the dot com meltdown of 2001, economic recovery was confirmed and gathered momentum only when actual sales of trucks started growing. And yes, the Indian Railways did miss freight targets for the first five months of fiscal 2009; but freight traffic actually grew by close to 10% despite a crash in iron ore business. In fact, railway freight grew almost 12% in August, 2009.

There is a little more than truck sales and railway freight to confirm my hunch that the economy is now well and truly bouncing back. The cement industry reported an 11% growth in despatches and sales in July, 2009. The steel industry reported a 6% growth in despatches and sales. What does that mean if you ignore the jargon and the number crunching? It means that more roads, houses, plants and other things that need cement and steel are being built across India. It means that, in spite of the poor monsoon, there is simply no way that the economy will grow at anything less than 6% in the current year. And do remember, this is despite both exports and imports shrinking by almost a quarter as compared to the last fiscal year.

So does that mean the Indian consumer will start splurging again and we are heading back towards the heady days of 2006-08? I won't bore with analysis, apart from providing a small piece of statistical evidence. In August, 2009, India imported just about 12 tonnes of gold – 98% less than the amount last year. Yes, 98% less! What does it say about consumer confidence in India?!