Two Years of Lepep And No Miracle in Sight

As expected. They haven't taken the one decision which would have brought some sanity back: end the trickle-down economics started by Sithanen with the blessing of Ramgoolam. We're not only closing 2016 with the 6th consecutive annual growth rate under 4% -- half of the 8% promised -- and a GDP shortfall of nearly a trillion rupees but the economy was thrown into a recession in dollar terms in 2015. Indeed our economic output in USD contracted by about 10% last year from 12.5 billion to 11.3 billion. The decline was even steeper in the first quarter of 2015 which coincided with the first three months of the return of Basant Roi to the BOM. We knew the guy was obsessed with depreciation: the British Pound was worth an extra Rs23 at the end of his first stint. Now one of his recent statements seem to imply that our currency should be set at a level that allows the weakest of our exporters to break-even.

Many Lepep mams have already vire and are cursing that it's our worst government ever. Which would explain the increasingly large crowds turning out to hear Ramgoolam score some easy points. Can we blame them when a Minister -- who is probably mad that February 1st is a public holiday -- has proposed the following trade-off to us voters: food or sand? Or another one who wants to sell the CWA because he doesn't like its hotline? The trouble is that these toxic dynamics were set in motion by Ramgoolam ten years ago. And there's little he's said during the past two years that makes him a credible alternative to lead the country again.

A Trillion Rupees of GDP Missing, Almost

With respect to the robust growth trajectory that Sithanen's flat tax was supposed to place our economy on. The shortfall was about Rs5 billion in 2006 but has been growing exponentially because we managed only a 4% average growth over the last decade. Add all the shortfalls -- shown in red in the above chart -- together and you get Rs927 billion. That's greater than our GDP for 2006, 2007 and 2008 lumped together by almost Rs200 billion. Or a little more than three times our 2010 domestic production. The cumulative shortfall at the end of 2016 will likely be a tiny bit larger because the growth forecast has been revised downwards.

Of course a smaller but still gigantic toohrooh has helped eject Ramgoolam from power and Parliament in 2014. By the end of this year it would have grown by 72%. A meaner beast that Pravind Jugnauth must absolutely tame tomorrow to avoid political mayhem in a couple of years. At most.

Ministers and Growth Rates: The Last 20 Years

This is what I could blog in 18 months when we go to the polls assuming we grow at 5% until then. As the table shows the average growth rate of the current government would barely fall short of 5% and certainly puts the so-called reform-induced robust growth performance into perspective: Sithanen will actually do worse than his first time around when... no reform was implemented.

And should we tag along at 3% instead it would yield the worse-performing mandate as far as that extremely limited economic statistic goes. But of course we won't go to vote in July 2010: it will be the World Cup Stupid!