WORRY ABOUT THE TRUST DEFICIT, NOT THE FISCAL DEFICIT

The country is now firmly caught in a vicious, stagflationary downward spiral. And the reason is not the fiscal deficit, that bugbear of economists, or a delusional stock exchange, but the complete decimation of trust and belief in the government and its various agencies. The tangible framework of a nation- Parliament, laws, courts, institutions, agencies, media- these are but the hardware of governance and democracy. What drives them is the trust and faith that the citizens have in them- the software without which they cannot function in the manner they were intended to. And today this software has been taken over by a malevolent virus and the entire machinery of state has turned rogue, it is destroying that which it was supposed to protect, promote and guard. Vast sections of citizenry no longer trust the government, and those that do, do so for the wrong reasons.

The grandiloquent promises which brought the BJP to power in 2014- Rs. 15 lakhs in bank accounts, 20 million jobs a year, strengthening of federalism, safety of women, social harmony, respect for the constitution, eradication of corruption, transparency- were embraced by the people but started unraveling very soon, more so after May 2019. The union govt. is in constant conflict with non-BJP state governments and is continuously encroaching on their jurisdiction through the NIA, CBI, changes to the Finance Commission TORs, partisan use of Governors. Even the pretense of federalism has been given up and the deep mistrust is reflected in the refusal of at least ten states to conduct the NPR, and the resolutions against NRC.

Betraying the people’s trust and its own promises, deals like the Rafale purchase, allotment of airport, mining, port, power projects to a restricted list of companies are not only opaque but raise other fiduciary questions too. Crimes against women have gone up exponentially, with some of the BJP’s own leaders being involved and, worse, being protected. Social harmony is in tatters, the riots in Delhi being only the most recent examples. Jobs are being LOST by the millions every year, not created. If an honest assessment were to be done it would probably reveal that the number of families below the poverty line has increased during the last three years, owing to maverick economic policies. The envelope of the Constitution is being pushed to its limit by dubious legislations.

There are no takers now for the spurious statistics churned out by a govt. which does not accept the figures of its own agencies, and either trashes them or suppresses them, as it did with the National Statistical Commission’s employment and consumption/ expenditure surveys. It does not add to the citizens’ confidence when ex- Chief Economic Advisors maintain that GDP figures are fraudulently bumped up by 2.00 to 2.50 points, or when heads of statistical organisations resign because of interference. Even the international organisations no longer go by the govt’s official figures but generate their own by looking at broad industry markers instead- one reason why they are continually downgrading our economic forecasts.

Much of the social disruption, bordering on anarchy, on display these days is because of the CAA/NRC/NPR trinity. Hundreds of millions have no faith in the government’s “assurances” on the subject; how can they when the Prime Minister says one thing and the Home Minister another, when there is complete dissonance between what is said in Parliament and in TV studios and interviews? It’s not just the confusion over their stands that creates doubts, it’s also the blatant, easily verifiable untruths- about existence of detention centers, about NPR being the “first stage of NRC”, about the revised NPR questionnaire, about the compulsion to produce documentary proof. How does one repose trust in the government when, after after imposing the world’s longest ever internet lockdown on Kashmir, the Law Minister pontificates on the 2nd of March at a seminar that for his government “accessibility to the internet is non-negotiable”? Or when the PM says that we should honour wealth creators but his government lets loose the CBI, ED and the Income Tax department on businesses and banks in a manner never seen before? It is this overwhelming dissonance between its statements, and the dichotomy between its claims and its actions that are leading to a collapse in the people’s trust. A govt. which lies through its teeth engenders not only distrust but also fear. The result is that even innocuous surveys such as the household census on consumption or of domestic tourism expenditure are now being obstructed by people; in some cases field investigators have been held hostage. People are just not willing to provide any information to govt. agencies, fearing it shall be misused for the NPR/NRC. If this continues the entire statistical base of development data shall be contaminated, effecting not only the nation’s planning but also its image as a destination for foreign investment.

This suspicion of the BJP government’s true intentions and motives is an important reason for the paralysis in the economy. Consumption has bottomed out, demand is at an all time low, industrialists are not borrowing and banks not lending even though they are flush with funds post demonetisation. According to a report by Shekhar Gupta in The Print banks have total deposits of Rs. 141 lakh crores but have been able to lend only Rs. 95 lakh crore- Rs. 46 lakh crore is lying idle which could have been utilised to create jobs, ramp up production and demand. Instead we are now headed for a period of stagflation.

This cloud of suspicion has spread over just about every public institution, which are now seen to be suborned instruments of an over arching state, timidly doing its bidding- the RBI, Election Commission of India, CAG, NHRC, the regulatory agencies. Most dangerous of all, people’s faith in even the Supreme Court and the higher judiciary appears to be getting eroded at an alarming rate; they cannot be blamed given the tenor and ambivalence of some recent judgments- and adjournments!- on Kashmir, habeas corpus, CAA, Ram mandir, hate speech and the Delhi riots. It doesn’t help matters when a senior Supreme Court judge chooses to heap obsequious praise on the Prime Minister at an international conference of jurists.

And these misgivings are now no longer limited to our national borders but are spreading like questioning ripples into the international community, notwithstanding choreographed visits of foreign ambassadors and the hugging trysts with Donald Trump. The diplomatic firefighting and the refrain of ” this is our internal matter” are losing traction. The ultimate humiliation for us has been the intervention application by the UN High Commissioner of Refugees in the Supreme Court in the challenge to the CAA- the first time in our history, reducing us to the level of some African and South American nations, struggling to become democracies. Can there be a bigger come down for a nation which prides- prided?- itself as a beacon for other countries?

Nations can withstand political divisions- in fact, in mature democracies this only makes the democracy stronger, resilient and broad based. But if they are divided on the basis of religion and a jaundiced perception of historical wrongs, they can only weaken and descend into social and economic collapse. In our federal system, if the center and the states do not work together then even the best policies will flounder and fail to deliver. Outsiders will not invest and domestic wealth creators will take their money abroad to more stable countries, as 5000 dollar millionaires did last year. Economies are not built in vacuums but on platforms where govts are trusted, policies are progressive, laws are free of biases, courts are objective, institutions are allowed to function according to their mandates, societies are stable and the citizenry are not killing each other over their gods. Our problem today is not the fiscal deficit, it is the trust deficit. In sheer economic terms we were in a much weaker position in the early 1990’s, when we even had to pledge our gold reserves. But our social fabric was not torn and our institutions were not compromised, we were able to weather the storm and emerge as a 7%+ GDP growth economy. We were able to do so because the country was united and the government of the day was trusted to do its best. That unity and trust are missing today.

Avay Shukla retired from the Indian Administrative Service in December 2010. He is a keen environmentalist and loves the mountains. He divides his time between Delhi and his cottage in a small village above Shimla. He used to play golf at one time but has now run out of balls. He blogs at http://avayshukla.blogspot.in/

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.