The Telegraph
Since 1st March, 1999
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- Enemies of the working class

I wish to acknowledge my deep debt to Comrade A.P. Bardhan. Four months ago, when the news began to trickle that the NDA was going to lose, the stock market went weak in its knees. When the Congress seemed to pull ahead, the punters got further disheartened. When it looked likely that the Congress would need the support of the Communists to form government, investors began to run out of the market. And then came Bardhan on television and announced that it was all a conspiracy of the BJP and its capitalist supporters. On that day I thought that even Communist folly must have an end. I felt that eventually the market must cease to be scared of the Communists, who nowadays are only cosmetically red, and return to reason. So I went and bought a few forward contracts on Nifty. But I had underestimated the heights of folly to which politicians could rise. Unfortunately, Manmohan Singh added his bit: he threatened stock market players that he would ask SEBI to look into their tricks.

While the Communists could go on being pigheaded, I thought Manmohan Singh must realize before too long that he had been stupid ' and retrace his steps. When sense returned, the market must go up. So I went and bought a few more contracts.

Unfortunately I bought them too early; the dance of folly continued the next day, and the sensex touched 4400. Since then it has been recovering. I am glad to say that finally I have recouped my losses, and that I soon expect to make a tidy packet.

Once I have done that, I would like Comrade Bardhan to go again on a rampage; this time I hope he will be joined by his more photogenic comrades, such as Sitaram Yechury and Brinda Karat. They have ready access to television cameras, and getting on television is important. I would like them to give the government a terrible scare. I do not know how it will affect the market. It may go into a spin at the prospect of instability; or it may be ecstatic at the prospect of the fall of this government. Either is fine. If the market falls, I will buy; if it rises, I will sell.

I will be accused of being a shameless speculator; and I cannot deny the charge. But I would also point out that the Communists are good for speculators like me. They are not strong enough to come to power and destroy the capitalist system; they are just influential enough to cause periodic scares. As long as the scares are periodic and reversible, they create ideal conditions for speculation. This speculation is completely unproductive from the economic point of view; but it is highly productive from the point of view of speculators.

That would not matter as long as no harm was done to the economy. Unfortunately, however, it does do harm. It raises the level of uncertainty; it thus leads people to favour investments that are short-term and liquid ' like Nifty forward contracts. And it mitigates against long-term, illiquid investments, such as bread ovens or shoe factories.

Would that be serious' It would not if people were investing madly in productive assets as they do in China. But in India where there is so much unemployment and so much poverty, we need far more investment. Not only would investment be good for the poor people whom the Communists care so much about; it may even be good for the Communists if it brings in a few more members to CITU.

When I went to my broker with the intention of speculating, I noticed something strange on his screen: the price of a forward contract was lower than the spot Nifty. In other words, if instead of buying shares straightaway, I contracted to buy them three months from now, I actually had to pay less. In effect, someone else was prepared to hold the shares for three months and sell them to me on 31 December at a lower price. But he would be holding the shares with his own money; would he not expect interest on his investment' Apparently he does not; he is prepared to lend me the money at a negative rate of interest. That can happen only in our country.

Mr Arjun Kapoor, my broker, thinks that this is because the people of India are inherently pessimistic about the future of their country. They do not know what will happen to it in three months; they think the chances are that the stock market will be lower in three months' time. And the strange thing is, they think this at almost all times; however well or badly the economy is doing, however well Vajpayee or Manmohan Singh is governing the country, however good the rains, they cannot be shaken from their belief that something bad will happen in the near future.

He asked me why the golf courses are full all the week around. In other countries, golf courses attract players only at weekends, for the rich who frequent them work during the week. In this country, however, they do not have to. They have made their money, and are out to spend it. More important, they are intent on spending it, not on earning more. For they do not know what will happen tomorrow; they fear the worst.

I am not one of them ' I do not belong to a golf club, and I have to work for a living. But early in life I realized that Indians build up productive enterprises only when they cannot think of an easier, less productive way of making money, and that they lose interest in production as soon as they have made enough money to live comfortably. One of the first studies I did was of sports goods manufacturers of Jullunder; I met about a couple of dozen of them. They had all done extremely well out of exports. All of them had small, dingy workshops, and huge, luxurious family homes. None of them wanted to expand production. Why' They said, too many hassles. Too many officials ' in tax offices, property offices, electricity offices etc ' looked upon industrialists as fair game, and tried to milk them. It was better to be small and inconspicuous.

It is these officials, and the politicians who share in their spoils, who discourage productive enterprise, and who prevent unemployed young people from getting work. That is why about a half of the country's savings and an eighth of its domestic product are used to buy safe government securities such as life insurance policies and small savings certificates, and why India cannot match China in manufacturing prowess.

Bardhan is not one of these parasites. But he and his colleagues only add to the general uncertainty and intensify people's preference for fixed deposits as against workshops. They may not realize it, and they would be most loath to admit it. But they are enemies of the working class. And they do not even get paid for it; theirs is a labour of love.

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