Page 12 - The Indian EYE 021023

OP-ED FEBRUARY 10, 2023 | The Indian Eye 12

Centralized budget,

world scene and market regulation

Views and opinions from the top commentators in Indian media

e all know that the Naren-
dra Modi government has
Wstrong centralising tenden-
cies — not just between the Centre
and the state governments but even
within Central ministries, with the
Prime Minister’s Office and the min-
istry of home affairs being the loci of
real power. We also know that with
the closure of the Planning Com-
mission and the effective disbanding
of the Inter-State Council (the last
meeting of which was held in 2016),
state governments have lacked a plat-
form on which to bring their concerns
and voice their views on crucial mat-
ters of economic policy that affect
them.
State governments accounted
for nearly two-thirds (around 62.4%)
of the total public spending in India
in 2019-20 but received only 37.3%
of the total resources raised. This
would be bad enough for any sem-
blance of genuine federalism.
But what makes things worse is
that they simply cannot ignore the
massive destabilising impacts of the
major policies of the Central govern-
ment that are announced suddenly
and without consulting them (such
as demonetisation and the pandem- Union Finance Minister Nirmala Sitharaman addressing a post budget press conference in New Delhi on Wednesday (ANI Photo/Sanjay Sharma)
ic-induced lockdown of March 2020
onwards) because they have to deal emptively to mitigate it? It’s not clear. overseas markets. One of the lessons
with the consequences of such inter- A GLOBAL STORM of the 2008 global financial crisis is
ventions. magine a possibility: The US – -- Sajjid Z Chinoy, The Indian Express that these links can show up in un-
Yet, they find themselves increas-
whose growth momentum is
ingly strapped for resources even as Islowing markedly – slips into MOVE FAST, REGULATORS expected ways far from the epicen-
ter of the crisis. Adani group firms
they effectively receive smaller and recession, pulling parts of the global he day after Adani Enterprises have raised debt overseas. Over the
smaller shares of the total public re- economy with it. Inflation comes off decided not to go ahead with last few days, the price of some of
sources raised. and central banks quickly pivot. But Tits fully subscribed follow-on the debt securities has fallen sharply.
This paradoxical combination of
extreme concentration of political, now, emerging markets face the op- public offer (FPO), its shares closed Consequently, as media reports indi-
cate, some of the Adani group debt
lower by 27% at Rs 1,565.30. It’s now
posite problem. The global econo-
economic and fiscal power with sig- my becomes a large drag on growth. around half the floor price of the securities are no longer accepted as
nificant decentralisation of responsi- A third Goldilocks scenario is that FPO. In all, seven listed companies of collateral for trading. The fallout of
bility and accountability is obviously advanced economies’ growth slows the Adani group have lost more than such an environment will be felt by
incompatible with ‘co-operative enough to bring inflation down but $100 billion in market value since the group’s firms as it’s bound to af-
federalism’ — indeed, it is unlikely not enough to trigger a sharp reces- January 24. In the backdrop of these fect both the flow of credit and its cost.
to be compatible with any real fed- sion, generating the “soft landing” developments, India’s regulators and There’s also the risk that negative
eralism. Instead, and especially when that markets are fervently hoping for. politicians swung into action. Parlia- perceptions may impact other Indi-
combined with the open hostility What this range of outcomes ment had to be adjourned over the is- an firms that have raised debt abroad.
and apparently vindictive moves by reveals is the sheer global uncertain- sue. Separately, RBI has asked banks
the Centre towards states ruled by ty – in quantum and direction – that about their exposure to Adani firms, -- Editorial, The Times of India
Opposition parties, it creates what policymakers have to contend with. Sebi is also active and NSE has put
could be called ‘combustible federal- Should the focus in 2023 be to pre- some Adani firms under additional Every week, we look at what the top
ism’, something that could threaten serve macro stability? Or should it be surveillance. commentators in the Indian media are
our very political fabric. talking about and bring to you a slice
to anticipate the global slowdown’s Indian conglomerates now have of their opinions and comments
--Jayati Ghosh, The Telegraph (India) impact on India’s growth and act pre- both business and financial links with

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