Election outcomes are unpredictable, particularly of India after the decline of its grand old party. Sonia Gandhi struggled on through the worst days, and brought the Congress back to power for a decade. But just when the caretaker walks away into the sunset and Rahul Gandhi prepares to take over, it looks as if the reins of power may slip out of his hand. The man who is supposed to have taken the economy out of the last great crisis has guided it into the next great slowdown. The people have not taken kindly to the misfortune, or mishandling, as the case may be, and seem to be preparing to get the Congress out. Narendra Modi is running across the field to take the catch. He may, or he may not; the ladies who dream of being prime minister do not yet have to give up hope. But whichever of them takes the reins of power, she or he will inherit a fragile balance of payments.
At its core is the enormous trade deficit, which in the first eleven months of the current financial year exceeded $128 billion. That was almost a third less than last year. Still, it is daunting; India exports only 70 per cent as much as it imports. It is a shame that a country which has the cheapest work force amongst major nations should be so bad at exporting. There is no immediate crisis, for the reserves the buildup of which began in the times of the last Bharatiya Janata Party-led government are still substantial; even if exports disappeared, the country would be able to survive for a few months. Still, repair of the trade balance should be one of the new government’s first priorities. No one would guess India’s biggest export item. It is petroleum products, accounting for a fifth of exports. That is not because India is a great oil producer, but because the government gives subsidies only to its own oil refiners, and has left Reliance out in the cold. As a result, Reliance developed markets for its oil products all over the world. A couple of years ago, paranoiacs broke into a lively Bollywood jig when they discovered a thousand-fold increase in exports to the Bahamas. Essar issued a prompt press notice denying any connection. Just when the media thought they had caught black money by the tail, it turned out that Reliance had used the Bahamas as a transit point for its exports to the Americas.
Arvind Kejriwal has been teasing Lal Krishna Advani about his nominal closeness to the Adanis. Behind this levity lies an important fact — Gujarat has hosted India’s largest companies, and derived considerable benefit from them. India is probably seeing the exit of a party that thought it a sin to promote Indian business. It would not be bad if India saw a changed mindset in the next government.