In the space of less than six months, swathes of industrial clusters that service the export markets have been laid low. Yet at the same time their counterparts that depend on the home markets have done rather well. So you have the brass metal workers in Moradabad gasping for breath, but their brethren in Varanasi are much better off in their saree handicrafts that are essentially driven by domestic demand. No organisation can really paint a complete picture in numbers, but anecdotal experience of development workers confirms this trend substantially.

That the Indian market is better situated to handle the global meltdown has become quite evident, but that the impact has become so differentiated in towns far away from Mumbai and Delhi is a very key input the new government will have to understand. Unfortunately that level of understanding is quite clearly missing from the political debate in the run-up to the elections.

To illustrate the contention, here is an examination of four issues that are as relevant for small and micro industries as for big factories in the current slump, but which are at best likely to be addressed the wrong way up or ignored in the election campaigns. Understanding them is crucial to making sense of the problems that have beset the economy and will continue through 2009.

The biggest chunk of the missing link is interest rates. Hardly any political party has chosen to articulate its position on how interest rates have become key determinants in the economy. The role is far more nuanced than the interest subsidy culture for farmers spawned by the largesse from state-controlled banks.

... contd.