The other related topic is the drying up of demand for credit. It is true that banks are just not willing to give credit despite ample liquidity. But gradually as the growth rate slows down, the demand for credit from industry too has begun to tank. It has happened in the United States and Europe and threatens to become a big challenge for the Indian economy as well. Remember, for Indian banks, if they fail to find farmers and small industry to lend to, they can park the funds in the Rural Infrastructure Development Fund papers from Nabard. Figures show the demand for the latest RIDF window has shot up. Credit is just not happening.

Still it’s a no-brainer that no political leader would be out chatting with his audience on interest rates, exchange value, dipping inflation or even credit disbursal. If they do talk about credit it would be more in terms of corruption in the disbursement mechanism. There is therefore a problem of connection. In the year when the Indian economy is facing the implications of the massive global economic crisis, political parties are just not in sync with what the economy needs. It is that same limited understanding that would possibly colour the discussions after the next government is formed.

Instead what they need to grasp is the deep connections that the small and even micro sectors have developed with the rest of the economy. The prescriptions too therefore have to be the same. Since not all units or all clusters will need help, if any government works out a one-size-fits-all formula, those just would not work. The question to ask of the parties therefore is how sharp the learning curve they are on is to match with the demands of an economy which is highly globalised and needs the same sort of stimulus.

... contd.