From The Economic Times
DAVOS: It is easy to get carried away by talk of India as the brightest spark in a gloomy world in Davos. No major country is growing at over 7% a year and if you are an Indian government official or a minister, you are more than likely to have got a few pats on the back for keeping the hopes of the world afloat. But the two top Indian officials in the Swiss mountain resort, tasked with the job of selling the India story, handled such laudatory references in the best way possible. Yes, India is growing fast and that is a good thing but there is more the country can do and growth can and should be faster if the big job of reducing poverty is stepped up.
Raghuram Rajan, the Reserve Bank of India governor, came to Davos with a considerably enhanced reputation. His renown has only grown in recent months as his warnings against excesses resulting from reckless central bank money once again appear prescient in the light of current financial market volatility. In comparison to Finance Minister Arun Jaitley’s four open sessions and numerous interactions with global leaders and chief executive officers, Rajan’s public interactions were modest.
But in closed-door meetings and select interviews, the RBI governor spoke in carefully measured tones about the economy’s actual state, the country’s achievements despite major difficulties and how it should avoid getting complacent and carried away by the ‘India as the bright spot’ rhetoric.
He spoke about how a distinct recovery is taking shape and what an emerging economy like India should do in light of foreign portfolio outflows. But his most important point was the warning against complacency and his fear that China’s woes may continue to roil the market for some more time.
Rajan’s stature ensured that his statements got the attention and respect they deserved and the governor also played a part in ensuring that the positive aspects of the India story were discussed and highlighted. Whatever reservations RBI may have had in respect of the country’s revised GDP data don’t seem to exist anymore and that’s probably a good thing for India and its investors.
Arun Jaitley had a far tougher job on hand. He used his meetings and interactions with foreign CEOs like Stephen Schwarzman of Blackstone and Brian T Moynihan of Bank of America Merrill Lynch to press India’s case as an attractive destination for foreign capital. The ‘Make in India’ logo was widely promoted and advertised and Jaitley also participated in a panel discussion on the global economic outlook with other heavyweights such as UK Chancellor of the Exchequer George Osborne and IMF Managing Director Christine Lagarde.
Jaitley’s second major job was to avoid self-congratulatory preening and grandstanding that sometimes comes naturally to politicians in a foreign country. The fact that he focused more on challenges and the job at hand went down well with some of the foreign CEOs in attendance.
The world economy is sliding down a slippery slope and a gentle shove is probably all that is required to tip it over. If such a thing happens, India’s aspirations and the ambitions of the Narendra Modi government to spur growth and jobs may fall flat. The economy may also falter if demand doesn’t recover and monsoon fails for the third year in a row.
India’s job at Davos was less about promoting any success it may have achieved — it needs to be remembered that the performance is good only on a relative scale — but to temper expectations and focus on solving problems. Rajan and Jaitley accomplished that job quite well.