How The Government Messes Up Its Communication

The ban comes at a time when the nation is expecting something far more substantive

Govindraj Ethiraj
Updated: Aug 28, 2013 01:48:52 PM UTC

At a media conference last week, Finance Minister P Chidambaram snapped at a journalist who asked him about the government's rationale behind slapping a ban on duty-free import of colour television sets as a move to correct a Current Account Deficit (CAD) and save foreign exchange. The ban kicks in today.

"Don't confuse the trivial with the serious," he retorted (or words to that effect) and then proceeded to explain that the move was really aimed at targeting 'couriers' who carried LCD television sets with them, mostly from countries in the neighbourhood.

He added that you could still bring TV sets as part of hand baggage as long you paid your import duty. Which sounds like a weak revenue-boosting move and not a CAD-fixing move, but that's a different issue. He didn't quite explain why then this move was announced now, at a time when the nation was expecting something far more substantive and a desperate sign that its economic masters were actually at the helm.

The theme of this hurriedly called media meet, the FM said, was to communicate the real picture coupled with an exhortation to media to not present distorted views--a much loaded statement aimed at various constituencies including media itself.

Nevertheless, it's useful that the FM reiterated the point about communication because that's perhaps the only issue that's worth debating here.

Lets return to the matter of imported LCD television sets. How would this idea have originated? And how did it get precedence over other, potentially more sensible, ones? I did a quick search and couldn't find imports of any appliances in the top 10 list of categories earning revenue from customs. Of course, it could be argued that the exchequer is losing money precisely because LCD TVs are slipping in insidiously.

But against imports of capital goods, steel, gold, chemicals, medical equipment, petroleum products and so on? Highly unlikely.

I can almost picture a hurriedly called meeting of the top brass of the Central Board of Excise & Customs (CBEC) and someone piping up, "Sir, we've been saying this for years, we are losing crores  because of these TVs being brought in as hand baggage. We should ban them."

Not to be unkind but I would place the vintage of this person at around 50 years. The person would obviously have had some exposure to liberalisation but also strong (and fond) memories of controls and the on-ground powers it conferred to the now listless Customs officials prowling India's many international airport arrivals halls.

But you can’t blame this person alone. It's the dominant voice from the government side of the discourse; we don't need this, we don't need that, why are we importing mobile phones, surely we can manufacture all of this here. Can we? How far is our manufacturing policy on execution? And for the electronics industry?

But you can surely blame the finance minister or his cohorts for, first, not plumbing the system to see if someone had a really new, sensible set of ideas to fix the problem. And second, not realising the miscommunication a move like this would result in. At this time. I would place more emphasis on the latter.

Its quite likely the FM had no hand in this announcement and he might have well stopped it had it come to his notice first. But we don't know. On the other hand, if the government is really itching to crack down on TV couriers, surely there can be a later time to address it. It's not like the LCDs started arriving en masse last month.

At the same meet, Mr Chidambaram said repeatedly that the government had no intention of controlling capital outflow. In response, the rupee--on Friday 23 August--jumped 135 paise and ended at 63.20 against the US dollar. Stocks hit a one-week high.

It would appear that at times like these, calm inaction might appear more reassuring than panicked reactions which give away more than you think. Worse, I thought we learnt these lessons years ago after seeing all those re-runs.

Of course, this is only the beginning of the battle for which the fronts are elsewhere and maybe not in monetary and fiscal management steps, knee-jerk or otherwise. Meanwhile, for now, lets stick to careful communication.

The thoughts and opinions shared here are of the author.

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