Across the Aisle: Stand up and be counted
January 18, 2015

Across the Aisle: The State of the Union 2015

I am happy to be back in this space and begin a conversation.

Before and during the elections to the Lok Sabha, we were concerned with the state of the economy. After the elections, and seven months after a new Government assumed office, those concerns have not gone away. Rather, new questions concerning the economy and the polity are being raised every day.

In the middle of 2013, the economy was on the mend. Then, Mr Ben Bernanke struck with a thoughtless remark on withdrawing from ‘quantitative easing’, when that step was several months away. Nevertheless, the government of the day gamely stuck to the target of fiscal deficit, contained the current account deficit, allocated money for publicinvestment and key social sector programmes, and promised that economic growth would revive in 2014-15.

Calendar 2014 can be divided nearly equally between the UPA government and the NDA government. Luckily, therefore, we do not have to apportion blame or deny credit.


One year ago, growth was faltering and the financialyear ended with an unsatisfactory 4.7 per cent.Today, after 5.7 per cent and 5.3 per cent in Q1 and Q2 of 2014-15, there is still no assurance of revival.

At the end of November 2013, year on year non-food credit growth was 14.7 per cent; at the end of November 2014 it was just  11 per cent .
The decline in the rate of inflation began in November 2013 (see graph) when the UPA was in office.  Thirteen months later, the decline continues, accelerated by the  fall in the price of crude oil, a windfall for the NDA.

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Last year, at this time, the price of Brent crude oil was around USD 99 per barrel. This year it is around USD 53 per barrel, and falling.  Government has been able to play bothgood cop and bad cop. It has cut prices of petrol and diesel as well as raised duties onpetrol and diesel.

At end-2013, the repo rate (set by the RBI) was 7.75 per cent. At end-2014, it stood at 8 per cent. Then, the Rupee had traded at 61.90 to the dollar; now it is at 63.33. A year ago, RBI’s foreign currency assets (FCA) stood at USD 268 billion, this year has begun with an impressive USD 295 billion. Prime Minister Modi is a votary of a “strong” rupee, his party had argued for Rs 40 to the dollar, but the RBI is happy to see a gradual depreciation! I am pretty certain that the RBI is buying dollars and letting the rupee slide. Mr Modi and the rupee are trending together — one crossing, other touching, 64.

On 1-1-2014, I was upset that the BJP had blocked the Insurance Laws (Amendment) Bill, 2008, and I did not have the numbers to promulgate an Ordinance or threaten to call a joint session of both Houses to pass the Bill.  On 1-1-2015, Mr Jaitley was upset that the Opposition in the Rajya Sabha had blocked the Insurance Laws (Amendment) Bill, 2008 and, therefore, he has used his numbers to promulgate an Ordinance and has threatened to call, if need be, a joint session of both Houses to pass the Bill.

On 1-1-2014, I gave up on the hope of persuading the States of Gujarat, Madhya Pradesh and Tamil Nadu to come on board to get GST started. I left behind a draft of the Constitution Amendment Bill and an incomplete draft of the GST Bill. On 1-1-2015, Mr Jaitley nursed the hope that the States of Gujarat, Madhya Pradesh and Tamil Nadu will come on board to get GST started.

In 2014, ‘Aadhaar’ was rubbished and  Mr Nilekani was fighting an election. In 2015, ‘Aadhaar’ reigns and Mr Nilekani  is forgotten.


Just before the start of 2014, the idea of a National Counter Terrorism Centre (NCTC) was foolishly scuttled by non-Congress State governments. Just before the start of 2015, a non-Congress Central government has wisely discovered the need for a NCTC. In early 2014, NATGRID was tottering because of opposition of the Intelligence Bureau (IB) and insufficient support of the MHA. Towards end 2014, NATGRID was on a trot with an IB officer as its head and enthusiastic support of the PMO.

At the dawn of 2014, the International Border and the Line of Control between Indiaand Pakistan were relatively quiet. At the dawn of 2015, the India-Pakistan border is one of the hottest borders. 2014 witnessed over 500 ceasefire violations. About 40security personnel were killed or injured in firing, 113 villages were evacuated, and about 30,000 persons were displaced from their homes.

One year ago, the words that resonated through the length and breadth of the country were development, investment and jobs. Today, the phrases that dominate public discourse are ghar wapsi (reconversion), love jihad (love conquest) and Ramzaada vs haramzaada (Ram’s children vs bastards).

2014 was the year of acrimony. 2015 promises to be the year of acronyms.

2014 began with the message “Mr Modi can deliver”. 2015 has begun with the question “Can Mr Modi deliver?”