Open Forum

New Delhi, 31 December 2011

Encircling Malaise

OVERCOME CREDIBILITY CRISIS

By Dhurjati Mukherjee

The credibility of the Government is possibly at its lowest ebb, both at the political and economic front. Its handling of the Lokpal Bill has badly backfired, with not only the people but even its allies questioning its commitment to fight corruption. There has been an “erosion of people’s faith in the Government” and the confidence in public institutions too has declined. Worse, it has not been able to do anything tangible to ameliorate the conditions of the poor, and unnecessarily got embroiled in the poverty line controversy. The integrity of ministers and professionalism of civil servants too is being openly questioned. 

Indeed, there is a severe crisis. This despite that the fact the political class regularly speaks of cleansing the system, inclusive growth and ensuring better livelihood to the poor and the economically weaker sections. It is generally believed that the setback to growth is not so much on the deteriorating world economy, but the decline in poor management of the domestic economic fundamentals by the governments, be it at the Centre or States. Additionally, the monetary authorities, whose mandate is to control or at least check inflation, have tried their best but with severe constraints.

Whether the country will achieve an economic growth rate of 7 or 8 per cent in the current financial year or in 2012-13, is being debated by political analysts and economists and the question remains that high inflation and lack of investment needed for an emerging economy are problems that merit immediate attention.

Meanwhile, after economic growth during April-June period slowed to 7.7 per cent – the slowest in six quarters – the Reserve Bank of India – raised downwards its growth forecast to 7.5 per cent in 2011-12. However, many other agencies have stated that growth would be around 7.5 per cent this year. Even Finance Minister is reported to have said that overall growth and fiscal deficit for the current fiscal were likely to be lower than the targets fixed in the wake of the global financial turmoil.

Inflation has remained at over to 9 per cent for the past 12 months though food inflation, which increased to double digits, has declined considerably. Normally food prices do not affect inflation in most countries because food is a freely traded item. But not so in India, where agriculture is a controlled sector. Apart from inflation, rising foreign debts and fiscal deficits are plaguing the economy and creating a crisis situation.

Add to this the fact that a good part of the expenditure on Government’s various schemes and on infrastructure development is being misappropriated and not reaching the targeted beneficiaries. Moreover, the scale of corruption charges before the courts have eroded people’s faith in the present government.

The current drawbacks include inefficient management and corruption in social welfare schemes, infrastructure projects and other expenditures. The lack of strong and focused political leadership is undoubtedly a huge constraint. Some State governments have been madly managing their finances and West Bengal is a case in point as regards financial disciple is concerned. If expenditure management in the States was efficient and productive, the deficits would gradually reduce as would debt.

In the current situation, the strategy has to keep a balance between growth, inflation and development. Governance has to be improved which as CAG Vinod Rai pointed out is below par and lowest since Independence. He further stated that all efforts to improve governance will come to naught if the agencies responsible for governance do not consider probity in public life and ethical behaviour as cardinal principles in official dealings.

The objective before the Government is to lay proper emphasis on management of social welfare schemes and ensure that these reach those for whom these are intended. As is generally agreed such schemes in the field of employment, education, food, health etc. are bogged down by substantial leakages as a result of which the benefits are much less than envisaged. It goes without saying that the conditions of the poor and the vulnerable have not shown any remarkable improvement over the years in spite of rapid GDP growth. This reiterates the fact that the former need not necessarily lead to overall human development.

Another important factor which needs to be seriously considered is to ensure that growth in agricultural production remains at least at 4 per cent, if not more, to keep a check on prices and improve the livelihood of the farming community. Various efforts will need to be made in this direction, which include: availability of seeds at right prices and in proper time; bank loans to small and marginal farmers at 4-5 per cent interest; fertilizer subsidy to be paid to farmers instead of the companies; transfer of R&D from research institutions to the field; and district or sub-divisional centres to address technical problems of farmers.

Diversification of agriculture into agro-based industries will also need to be encouraged to transform the face of rural India. If the wheels of change help in changing the face of the villages, the lower segments of society will be greatly benefited. However, it has to be ensured that along with agriculture, agro industries, there is rapid development of small industries which can generate employment to the local youth.

Importantly, there has to be a change in outlook towards the whole issue of governance and development and viewed from a pragmatic and judicious standpoint. Political will and a sincere approach are critical. The priority in the new outlook would have to be the common man whose benefits need to be kept in mind while also not neglecting the economic growth perspective.

The question that obviously engages our mind is that will the desired change come about? One needs to be optimistic on this count as there are enough indications of a transformation in outlook occurring in the minds of political leaders – at least some of them -- activists, economists and a larger section of society. Perhaps, if the young generation gets the leadership of the political parties, there may be hope of a perceptible change in the developmental policies of the Government – both at the Centre and at least in some States.

But one aspect must be kept in mind that the poor and the backward sections – the tribals, dalits and other such communities – cannot be neglected for long as this will have further consequences both on the social and economic front. Clearly, there has to be developmental growth – more businesses by the people, for the people and of the people. The vision for the future should be based on Gandhiji’s charkha which symbolized that people would be earners and owners of their own enterprise – the new meaning of inclusive democratic capitalism. ---INFA     

(Copyright, India News and Feature Alliance)