The Real Foreign Hand Backing Anna

I wonder if those who see a foreign influence on Anna Hazare's movement realize how close they are to the truth. As I argue below, global trends now unfolding have a major influence on our social and political realities. Not of course in terms of the rather silly charges of conspiracy and the hidden hand but in a deeper more structural manner. Hazare's movement, aided and abetted unwittingly by the ruling establishment, has pushed all other burning issues to the background and now threatens to wipe out the monsoon session of the Parliament. This is indeed a great pity as we were earnestly hoping that the session would be used for pushing forward the slew of important legislations which have been hanging since long. This is the only way to reverse the perception of policy drift and help get the economy back on the high growth path.

Perhaps it is time for the industry, whose interests will be vitally affected by the likely social and political turmoil that would ensue if the current impasse persists, to try and get the two sides to converge. Let us not forget that the real cost of political turmoil is ultimately borne by the people who lose their livelihoods and incomes. The industry with its focus on possible loss of global competitiveness due to avoidable uncertainty and loss of production has a direct interest in ending the stand-off.

India should at this time be making extra efforts to ensure that its domestic investment climate remains attractive, its institutions are seen as robust and accountable and social and political stability is maintained. Those amongst us who have delusions of creating a Tahrir Square in Delhi are doing the nation grievous disservice. The global economic and political situation is turning ominous. Stock markets all over the world, including ours, are reflecting this extreme nervousness about short term prospects both in Europe and the US. These two economies, which account for nearly half of global output, are spluttering and in real danger of grinding to a halt. I am told that nearly a quarter of the young population in major European countries is presently under or unemployed and in the US the long term structural unemployment close to a fifth of the working population. These are frightening numbers in countries which are no more used to such sharp divides within their populations.

Europe with its under capitalised banks, stubborn fiscal deficits, rising public debts, ageing populations, slowing growth and political divisions that are becoming sharper, is virtually on the edge of a calamitous precipice. The US recovery has pretty much ground to a halt and the expenditure cuts forced by the belligerent right wing of the Republican party will not help matters. Housing prices remain stuck at their lowest since the Lehman crisis and fears of a double dip recession are now more widespread than ever before. The worst prognostications made by the indefatigable Paul Kruegman seem to be coming true. But not only are his recommendations for greater public expenditure ignored, the Tea Party stalwarts are forcing cuts when they will hurt the most. The downgrading of US debt, stagnant consumer spending, persistent unemployment, and massive slowdown in corporate investment have stymied all prospects of a quick and robust US recovery. All this does not bode well for the US economic prospects which may get worse before they get any better. With the trans-Atlantic economies barely keeping their heads above water, the centre of gravity of the global economic activity, investors' attention and job seekers searches will inexorably shift eastwards to Asia including South Asia and India.

All these global trends are directly and strongly related to Anna Hazare's movement. With dimming economic prospects in the West, investors are looking with greater interest and serious intent at investment prospects in emerging economies like India. This greater interest by foreign investors translates in to demands for and greater pressure on achieving more transparency in rules and procedures that affect investment. We are just beginning to realize the higher governance requirements of attracting greater volumes of FDI in to the country. Secondly, and more importantly, with the US and Europe not attractive any longer, the Indian elite does not have the escape route which took them away from the corrupt and dysfunctional procedure ridden governance systems in the country. Now that they have nowhere to go, they have finally focused on the need to set things right at home. Better late than never. And this bodes well for us. Thirdly, the Indian industry, having expanded, globalized and hence more exposed to best practices during the past two decades since liberalization speaks more freely and cogently against corruption and crony behaviour which puts the large majority of them, the honest and hard working entrepreneurs at a distinct disadvantage. And finally, the global explosion in information and social networking has taken firm roots and blossomed in India. Facebook and Twitter and the internet are all global phenomenon that have been successfully Indianised. The middle class now has unprecedented means to express its frustrations and mobilise public opinion around them. All these factors, directly and intrinsically linked to the global phenomenon, have strengthened and reinforced Anna Hazare's movement. Rooting out corruption and rent generation from the system will require systemise changes and not merely a single bill, howsoever well crafted.