Seventeen years ago, India had a payments crisis. Manmohan Singh was brought back out of retirement and made finance minister. One of the first things he did was to devalue the rupee, and to abolish export subsidies. Today, Western countries have a payments crisis. Their importers are cancelling orders. India’s export industries are feeling the pinch. As is the custom, the exporters rushed to the commerce ministry and begged it to do something. And the ministry, which has been rather short of business after trade liberalization, saw a golden chance. It has prepared a proposal that involves giving exporters of its choice a subsidy of its choice. How much of it will reach the exporters, and how much will disappear in the pockets of those who shell out the subsidy, are not specified. Once the commerce ministry had made a flourishing business out of import licences: the ministry gave them free, and its bureaucrats made a packet. Now comes a successor to that golden business: the ministry will disburse crores, and some will reach exporters.

When oil prices climbed peaks last year, the government told oil companies not to increase the prices of their products. When they complained of the losses to the government, it asked them to grin and bear it. When they started running out of money, the government told its banks to give them overdrafts. Luckily for the government, a global depression arrived, world oil prices collapsed, and oil companies became profitable again. It is that depression that is contracting world markets and hurting exporters’ profits. Last time, the government was lucky — the depression arrived before oil companies became bankrupt. This time it will not be so lucky; the depression is not going away soon. But then, the government cannot go bankrupt. It will just print money, and debit the cost to the Indian consumer in the form of higher prices.

There is a simpler way of tackling the problem — devaluation. The Reserve Bank of India has seen it; it has allowed the rupee to go down by 25 per cent in the past two months. That would boost exporters’ rupee earnings and enable them to offer price reductions in foreign currency. If this devaluation proves insufficient, more can be easily engineered. But this clean solution does not suit the ministry of commerce, because it does not create any business for the ministry. Discretion is the essence of the solutions the commerce ministry prefers; and the discretion must be equitably distributed among its numerous employees and hangers-on. All these years it longed for the licence raj which has passed. Now at last it has the chance to bring it back, and lead India back into the wonderful old days of socialism. It may seem surprising that Manmohan Singh, who led India out of it, should lead it back there again. But the times have changed: autres temps, autres moeurs.