Last week Prime Minister Manmohan Singh pulled an old rabbit out of his hat, or turban so to speak, to win the sympathy of the media and the general public for his government when he referred to the threat to India’s economic growth and political stability from external destabilisers. While many in the media pooh-poohed the prime minister, few opposition political parties did so. The reason being that most Indian political leaders and security specialists are all too familiar with the history of such attempts and one should not ridicule a prime minister when he talks of such threats to the nation. However, given the context, many would imagine that the PM was exaggerating the problem only to buy some respite from his critics. This may well be so, but even then one cannot entirely ignore the possibility that those who wish to see India weakened would make the most of the current situation.
Having said this, it is only fair to recognise that such external destabilisers are now fishing in increasingly troubled waters. India’s politicians, the bureaucratic machinery, the judiciary, the law and order machinery, civil society activists and large sections of the media, especially the increasingly influential and anarchic electronic media, are all responsible, admittedly with varying levels of culpability, for the malaise afflicting the Indian polity and its consequent impact on the ‘mood of business’. Interestingly, all the ‘talking up’ of the mood is being done by western businessmen who have invested in India and hope to reap a decent dividend. Thus, General Electric’s chairman and CEO Jeffrey Immelt told an Indian audience last week that “business is better than the mood”. In saying so Mr Immelt is also talking up the mood, because he knows, as any good businessman and Keynesian would know, that both business and mood feed each other.
As a diehard Keynesian, Prime Minister Singh would know too. His effort, therefore, has to be one of improving the mood at home so that it encourages more business and, in turn, better business improves the mood. Most of the problems India presently faces, including the threat of terrorism, have domestic roots that outsiders unfavourably disposed towards India would like to make use of. Even if the PM were right that there are external destabilisers at work, their work would become harder if the domestic environment improves. Since the government of the day can do more about altering the situation at home, rather than the plans of destabilisers abroad, it is better to devote one’s energies in that direction. There is no hiding the fact that a country like Pakistan would want to see India off balance at all times. Hence, the investment it makes in exporting terrorism into India. But, as we have seen in recent months, such imported terrorism breeds on domestic extremism. Hence, the fight against an external destabiliser, in this case jihadi terrorism, must go hand in hand with winning the battle against the internal factors that facilitate it, namely, religious extremism.
The same can be said about the economy. Unless India manages its domestic economy wisely, especially the fiscal balance and the growth drivers, the turbulent external environment can more easily destabilise the economy. The government has better control on the domestic levers and less on the external ones. So, even if there is an external problem, finding domestic solutions would be a better way of dealing with the challenge at hand.