Economic Highlights

New Delhi, 18 November 2011

Economic Summit

UNFAIR CRITICISM OF GOVT?

By Shivaji Sarkar

The Government is reeling under a scathing attack by the industry at the India Economic Summit held in the country’s financial capital, Mumbai. A top industrialist even accused the Government of suffering “paralysis in decision making”. The criticism of the Government sounds good all right as it makes a news copy. However, are the industrialists correct in their assault? Is the Government really suffering from paralysis?

The answer would be a no if it is taken in terms of the details furnished. The industrialist justified that many bills for economic reforms were pending for years. The areas he particularly pointed out where these “reforms” have not been undertaken are the financial sector – banking and insurance; retail and labour.  

However, these are the very areas the industry seeks to grab for a complete control on the financial prowess, throw out the small unorganised retailers and unleash a reign of terror on the working class. If the Government has not allowed dilution of stakes and large foreign investment in the banking and insurance sector, it is because of its policy, under pressure not only from the Left parties but even from the extreme right.

Insurance companies are gobbling up thousands of crores of people’s money in mutual funds (MF) under a clause of Insurance Regulatory and Development Authority (IRDA) that the subscriber has to take a decision within 15 days and not one year to cancel his MF policy. They are cashing in on the financial illiteracy of the people of the country. Sadly, the Summit was silent on this issue.

The Government is also facing stiff opposition in fully opening up the retail sector, though a lot has been done indirectly under pressure from the industry.  When it comes to labour, who cares for the legalities? Almost the entire working class has been turned into contract labour. Existing laws are being blatantly flouted and Provident Fund dues are not being deposited. Other rights of the working class are being ignored and the hire and fire policy has become the rule rather than exception owing to poor implementation of the laws.

Then, what more “labour reforms” they want? In fact, “reform” itself has become a terminology to exploit the masses. If the Government is suffering paralysis in these areas, it should be welcome. 

The industrialist has already grabbed many areas of business. The group is keen on entering the financial business, retail trading in a big way and is certainly not the ideal employer. He wants all his unethical, may be many illegal too, activities to be cloaked in a “legal framework”.

The India Economic Summit an offshoot of the World Economic Summit, in reality is a misnomer. These are lobby groups, which drew attention at the outset of liberalisation in early 90s. The groups in the garb of discussing the economy have always been trying to lobby for their own benefits and put pressure on the decision-making process. They have achieved a lot at the cost of the common man.

It is them who have been able to put agriculture on the backburner, enforce cut on farm subsidy and introduced futures trading in food grains. They went on acquiring large farmlands throwing many farmers to penury and even death. Much of today’s crisis in the farming sector, food shortage and high food prices are owed to these industry groups.

This has happened despite the so-called paralysis in decision-making. If the Government had bowed to them the situation could have been worse or even disastrous. The Government was being told for years to keep off these so-called “summit”. And, it happened this year. For the first time in 15 years, the top echelon of the Government simply gave the Summit a cold shoulder.

Regrettably, the “summit” except dishing out jargons did not seem to go into the details of the world crisis or suggest a new path for inclusive growth in India. It also did not suggest to the Government the ways to empower the people of this country to create the world’s largest and most vibrant market.

For namesake they discussed health issues and called upon the Government to increase investment which is at 0.9 per cent of the GDP. But they did not give a call to the pharmaceutical industry to reduce prices or create budget hospitals to improve the health profile of the country.

Clearly, the summit was keen on protecting the benefits of the industry, usurp more and give nothing to the people, who have ensured the luxurious life for the industry leaders. It appeared that the summiteers were not much concerned about the woes of the people. They shed crocodile tears on inflation calling upon the Government to control it.

Importantly, summits are not for giving calls but rather a platform to suggest concrete ways to achieve an objective. The industry lobbyists could have made themselves more credible had they suggested even three tangible ways to check inflation. No one spoke a word on the Rs 450,000 crore non-performing assets (NPA) of public sector banks. Almost all this money remains parked with various industry groups, who have refused to repay. Instead they sought more tax concessions (some of it is necessary) and also suggested bailing out industry groups, which have gone into losses for their not-so-good management practices.

Rightly enough auto major Rahul Bajaj opposed the bailing out of ailing industries, particularly in reference to Kingfisher Airlines. Taking the cue, the next day the consortium of 16 banks refused to restructure its loans till the airlines raised Rs 800 crore on its own. This should be a lesson for Air India and the public sector banks clamouring for a bail-out. Air India was forced into losses by the then top bureaucrats and political functionary to facilitate the growth of its competitors.

Sadly enough the top AI officials have been allowed to peacefully retire without any action against them. It is time to recover the losses from these officials and prosecute them for squandering away people’s money. The summit has been conspicuous for its silence on this vital issue.

During the regime of Late Prime Minister PV Narasimha Rao it was said that not taking a decision is also a decision. It seems to hold true for this Government as well. This should not be the way if it is in the farms sector, prices and protecting people’s money. The Government is not formed by the industry groups, but by the people.  It must act to increase subsidy on agriculture and initiate a discussion to strengthen the domestic consumers for a real inclusive growth – a point sadly missed by the summiteers. ---INFA

(Copyright, India News & Feature Alliance)