Fourteen months ago, the Left first made noises about economic policy even as the United Progressive Alliance government assumed office, and the stock market tanked. The index fell by more than 10 per cent before stabilising.
To be sure, share prices fell in international markets at the same time, so there were other forces at work; but there was little doubt that the comments by people like Mr Bardhan of the CPI on subjects like divestment played an important part in unsettling investors. People like the finance minister had to go quickly into damage control mode and try to restore confidence in the new government.
Fourteen months later, everything that the Left said they would do, they have done. They have stopped divestment in its tracks; they have prevented the opening up of key sectors to foreign investment.
They have also prevented pension reform and proper petroleum pricing. Under relentless and indeed growing pressure, the government has not even dared to address issues like labour market reform, while the new electricity policy has got nowhere.
The subsidy raj continues to run unbridled, and new spending schemes have been launched that will cost much more than the value they deliver. In short, the worst fears that had been aroused by the Left's initial sabre-rattling have come true and the general expectations of what the UPA government can do by way of economic reform have now reached minimalist proportions.
And yet, the odd fact is that the stock market is reaching for new and undreamt of heights every day. The index has moved up by more than 60 per cent in these 14 months.
This is not some flight of wild investor fancy, because the economy is doing remarkably well, and so are companies -- so much so that when Infosys announces 37 per cent growth, the market is disappointed.
Overall economic growth last year was a flattering 6.9 per cent on a high base (8.4 per cent the previous year), and now that the monsoons seem to be near normal, this year could be even better.
Indeed, the latest figures on industrial production show double-digit growth, and a born-again sector like textiles is clocking 35 per cent.
Investment demand has kicked in on the back of sustained consumer buoyancy, and bank credit is growing at the rate that prevailed in 1995, when the Manmohan Singh-C Rangarajan combine clamped down on credit growth with sharp interest rate hikes.
Yet interest rates remain benign, and (unlike 1995) inflation rates are low. In short, the Left can do its damnedest, but god is in his heaven. . .
Two claims have been made about the Indian economy in recent times. The first is that what used to be called the twin shortages of food and foreign exchange have become a thing of the past.
And the second is that even an oil shock of the worst kind is not able to upset the applecart.
Now, perhaps, a third claim can be made: that the economy will do well even if the government does precisely nothing. No privatisation, no fiscal correction, no opening up of sectors reserved for either the public sector or small-scale industry, no loosening up of labour laws, nothing.
Enough entrepreneurial energy has already been unleashed, the country continues to benefit from the forces of globalisation, macro-economic management remains reasonably competent, and there is no social or communal tension to frighten people, and all this has helped generate enough momentum in the system to make 7 per cent GDP growth sustainable -- with just one proviso, which is that investment takes place to build infrastructure.
That is not a given, of course, because policy still imposes constraints. And it might be argued that 7 per cent is not good enough when China has been averaging 9 per cent. Missing some obvious opportunities is a pity, when India clearly has the potential to do better than it is.
If you were inclined to be harsh in your judgement, you would even say it is an economic crime. But our stars seem to be correctly aligned, so even paralysis of economic decision-making does not come in the way of the kind of economic growth that most countries can only envy.
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