Franklin Delano Roosevelt, the 32nd president of the United States, said it just right. Taking over the presidency at the depth of the Great Depression of the 1930s, he declared, in his inaugural address, that “the only thing we have to fear is fear itself.” In many ways that statement sums up the outlook of the world in the coming year.
More than anything, fear seems to have paralysed governments, investors, bankers and businessmen across the world. Things are not as bad as they were in the 1930s, but few will disagree with the proposition that the world—say in Europe or the Arab world— feels that it is standing on the edge of a precipice.
In India, the fear has been of a different kind. It was triggered by the succession of scams that were unearthed in 2010 and by the high-profile arrests— Suresh Kalmadi, A Raja, Kanimozhi and others—of 2011.
This fear has led to a policy paralysis in government which in turn has led to a decline in the sentiment favouring India. No doubt there are several factors involved in the free fall of the rupee or the decline in foreign direct and institutional investment in India, but in considerable measure it has also to do with India’s lack of confidence in itself, an irrational doubt or fear of the future.
There are many ways at which we can look at the year 2012. This is the year when many countries in the world will mark time as they go through the process of changing their leaders. The United States, Russia, France, China, Venezuela, and South Korea will be among the nations which are likely to see a change of leadership, either through election, or design. Another angle of approach to the year would be to gainsay the manner in which the economic crisis in Europe plays itself out. You could also say that 2012 will be another year, just like the ones before it with the passing away of some old things and the birth of some things new.
Howsoever unified the trends appear when looked at on a global scale, India will, as usual, be different. Its defining general elections are slated for only 2014. Yet there will be a number of state assembly elections which begin to reveal the contours of that battleground. Economically, too, India could find a sweet spot despite its horrendous fiscal situation. Any growth above 6 or 7 per cent will still be growth, and if by summer the monster of food inflation is decisively defeated, we could have some easing of the interest rate regime which gives a needed push to the economy. And if the government can come through with some version of FDI in retail, it could get foreign investment in India moving again.
But all this presupposes certain things. The Congress has not been very good at running things in the last two years and change can come only if it is able to overcome its funk of the anti-corruption movement. The almost sequential revelations relating to the Commonwealth Games, 2G and other scams followed by the series of high-profile arrests unnerved the government. But we still do not have a clear explanation of why the government dealt with Anna Hazare and Baba Ramdev the way they did, or why they mishandled the whole FDI in retail issue.
This certainly gives ground for the fear that in 2012, neither the party, nor the government will be able to get its act together. But Congress scion Rahul Gandhi’s decision to increase his stake in the politics of the country dramatically is portentous. His Uttar Pradesh venture is no longer a set of guerrilla raids to irritate Mayawati, but a full-fledged campaign which is bound to play a decisive role in the fortunes of the Congress party in particular and Indian politics in general.
In contrast to India, the developments in China will be more dramatic, but only in the longer run. They will involve an entire turnover of its leadership. Xi Jinping and Li Keqiang, as president and prime minister respectively, are unknown quantities for most of the world. Yet their actions and perspectives will play a vital role in shaping the world’s economic and political profile in the years to come. But 2012, will be a relatively eventless year in China because this is the year of transition and that event will occur only through the party congress which takes place in October or November.
In India, the year will see a great deal of reflection on its relationship with China. This is not only because of the huge trade ties that the two countries have established, but also because this happens to be the 50th anniversary of the 1962 border war. While in China the event is almost forgotten, in India it is a national trauma and it definitely colours the lenses through which we view China. 2012 is not 1962. That was the time when we did not even know what was on the other side of the Thag La ridge. Today, not only would we have enough foreknowledge of any Chinese plan to attack us, but we also have nuclear weapons and the Chinese are, if anything, rational actors.
War is not a likely scenario in South Asia for that reason, not with China, nor with Pakistan. But that does not rule out proxy war of the kind Islamabad is fighting against us. But even there, 2012 is not likely to be a problem year, because that is the year when, officially at least, the US begins to pull out its troops from Afghanistan.
This has concentrated the minds of the GHQ in Rawalpindi on the AfPak region, to the relief of the Indians. But, the situation in Pakistan, like that in India, is unfolding at its own pace, rather than that of the rest of the world. And in many ways it looks more portentous. For the first time, civil society, politicians and the judiciary are ranged against the Army, albeit for their own respective motives. But, and this is the curious way things happen in Islamabad, without a pliant judiciary to endorse its act, the Army is going to think twice before overthrowing a civilian government.
Even so, there are enough wild cards that can make 2012 a memorable year for the wrong reasons. Principal among these is the prospect of conflict in the Persian Gulf region which affects our oil supply. The clock has begun ticking with Barack Obama signing the US sanctions law and there are enough irrational actors in Israel and Iran who can precipitate the situation. This is one fear which has a rational basis. The other wild card is a dramatically vicious terrorist act, perhaps with the use of a “dirty” bomb.
There is a certain duality in our leadership system upon which we will depend to make 2012 a shining year. At its worst it is the fumbling gang that can’t shoot straight, evidenced by the manner in which the government handled the Baba Ramdev episode.
On the other hand, the debates over the Lokpal Bill in the Lok Sabha showed that our Parliament still has the spark that is needed to give us a political system that works.
Perhaps, we too, should follow the counsel that Krishna gave to Arjuna, who was beset by fear of the future at the field of Kurukshetra— you really have no choice but to go forward.
Mail Today January 3, 2012