By Matein Khalid: Chief Investment Officer and Partner at Asas Capital
This time the wolf is finally here. The BJP government politics of communal hate have now cost the lives of 25 human beings and plunged India into a maelstrom of protests, a de facto revolt of the urban masses last witnessed during Indira Gandhi’s notorious 1975-77 Emergency. The political crisis in India will exact an incalculable economic toll at a time when GDP growth has plunged from 8% in early 2018 to a mere 4.8% now, the public sector’s budget deficit (New Delhi, state and public owned companies ) is a horrific 10% of GDP, the shadow banking system has imploded with a vengeance and millions of workers face unemployment in a nation must find jobs for 12 million young people each year.
I am seriously afraid about fate of the Indian economy in 2020. I read India’s former Chief Economic Advisor Arvind Subramanian warn that the Indian economy is headed towards an “intensive care unit” and a “Great Slowdown” in Zero Hedge. Dr. Subramanian is no media Cassandra but one of the world’s most respected emerging markets economists and he warned that India’s twin balance sheet crises will lead to financial disaster in the year ahead.. His bearish verdict on the Indian economy was made at a Harvard development conference and reflects my own capital markets focused views.
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It is now perfectly obvious to me why the RBI made five successive repo rate cuts in 2019 (and will make five more in 2020), why India is headed for its most severe balance sheet recession – deflation even – since the post Kargil war slump in the late 1990’s. So GDP growth can easily fall to 2%, well below November’s 5.5% CPI inflation rate and population growth in the world’s second biggest, ultimate emerging market. This means imminent disaster for risk assets – luxury property prices in South Mumbai have plummeted and the skeleton silhouette of steel/glass palaces for Dalal Street’s Richie Rich set now stand as a forlorn rebuke to the greed, reckless borrowing and lack of basic human decency at the pinnacles of India’s corporate banking elite.
Unlike the West, a credit crunch, a systemic banking crisis, an ice age in funding markets and deflation in India means human beings will suffer en masse because there is no safety net for some of the world’s most impoverished people – at least 100 million of “the wretched of the earth”, the powerless defined in the name of the powerful. I have seen little children begging in the cities of both Pakistan and India, heard the same tales of financial despair and quiet heroism from construction workers or housemaids – and I cannot but feel disgust for the callous sense of entitlement the financial elites of both successor states of the British Raj exhibit, the social class in which I and most of my South Asian friends were born.
I have only contempt for politicians who incite mass murder of the innocent…. East Punjab/Bengal 1947, Bangladesh 1971, Delhi 1984, Bombay 1993, Gujarat 2002 or Assam 2019. The Indian Union cannot be allowed to degenerate into another Yugoslavia, cannot allow a 200 million plus alienated religious minority to reach the point of no return.
Millions of human beings could die in a sectarian civil war on the subcontinent – have we forgotten the obscene bloodletting of Partition? When will this madness end?
Why cannot a South Asian Union unite 1.6 billion human beings in world history’s next economic superpower? Then and only then will India finally achieve its tryst with destiny, become the true jewel in the crown, humanity’s next great fairytale, a catalyst for an ancient civilization’s renaissance – incredible, incredible India. I have fond hopes in our children, (my twins are literally Gen Z Indian-Pakistanis with the blood of both M. A. Jinnah and the Emperor Shah Jahan in their veins, handcuffed to history by DNA!) our beautiful wunderkinds of the Digital Age. These adorable Gen Z darlings will be the ones who will heal the subcontinent’s ancient, wounded civilization. That much, at least, is certain.
The mass protests against Modi and the BJP that have convulsed India from Kashmir to Kerala are the biggest since the time of Indira Gandhi’s Emergency. Like Mrs. Gandhi in 1975, Modi has chosen to respond to the protestors with hard power, tear gas and police violence.
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Modi’s communal agenda is an existential threat to India’s secular fabric, to parliamentary democracy itself. There are 200 million Muslims in India and, as Mahatma Gandhi so poignantly observed, an eye for an eye leaves everyone blind.
Tear gas in university libraries? Mobs that burn history books? Muslim students subjected to vicious beatings in Old Delhi, Lucknow and Aligarh, bastions of Islamic culture for millennia? In 2019? Is this the ugly face of majoritarian Hindutva India Modi and the BJP want to project – an idea of India that disgusts countless secular, liberal Hindus who bear no malice to those not born into one of the world’s most tolerant religious belief systems, to a culture once admired all over the world for its quest for nonviolence, for its concern for the lives of both humans and animals. It is 2019 and young Indian Muslims scream “azadi” (freedom) and inqilab (revolution) in the heart of Old Delhi as they battle a repressive state. Shame, Modi. Shame, shame.
*The Opinions expressed by the author of this piece are those of the author and are not necessarily shared by this media*