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Government Failure SLOWDOWN DESPITE CONSENSUS, By Shivaji Sarkar, 17 August, 2012 Print E-mail

Economic Highlights

New Delhi, 17 August 2012

Government Failure


By Shivaji Sarkar


While Prime Minister Manmohan Singh is right on the slow pace of growth, he should not have blamed lack of political consensus for the problem. Divergence of views is a vibrant democratic process. In fact, there is consensus on a host of issues which the Government needs to acknowledge and act on them.


Questionably, is the rupee sliding because of lack of consensus? As, nobody, howsoever critical of the Government, would like to see the symbol of Indian pride lose its sheen. Add to this, banks NPAs – losses or unrecovered loans – are mounting. India’s prime bank SBI has about Rs 14,000 crore of NPA – up from Rs 12,000 crore. Undeniably, no Party would like to see the aam aadmi’s deposits being lost like this.


This is compounded by prices being uncontrolled, notwithstanding, a statistical fall of the wholesale price index to 6.86 per cent, food price increased by over 10 per cent. Is there any lack of consensus to contain prices?


This is not all. High travel costs of people and goods on highways due to oppressively high toll taxes, is yet another area were there is political convergence for bringing these down. But mum is the word.  


Then there is the cost of medical care which is going through the roof. Whereby, the poor cannot even think of going to a doctor, while the middle class feels happy if they can avoid a visit to the physician.


No less expensive is education. From pre-schooling to university education or professional courses are becoming difficult to afford. Particularly, as money has replaced merit. Is there any action to make it affordable?


Worse, petroleum companies are on a fleecing mission despite enormous profits. True, the Finance Ministry has started looking into their accounts but would anyone oppose any move to clip their wings? Now water, the only natural resource, so far, officially out of the ambit of commercialisation, is being privatised. That too, in a country where offering water to a visitor is considered a sacred duty?


Yes, there is general opposition. All know who is trying to capture this national resource. Yet, unfortunately, the Government is a willing partner in accelerating this process. Indeed, large multi-nationals have commercialised water leading to immense groundwater scarcity in Kerala and other States. Should there be consensus only for private profits even if the masses throats remain parched?


Alas, there is no clarity on GAAR and the Direct Tax Code. The Government seems to believe in increasing the tax burden on the people. Wherein, anyone opposing this is deemed to be against the national cause, if not anti-national.

Pertinently, if the Government wants to reduce prices, it needs to start from its turf. Clearly, the multiple taxation system needs to be simplified and made affordable. See how the recent price hikes of many commodities and services, including banks, is due to the high service tax.


Resulting in the industry and manufacturing sector being hit hard. Is there a lack of consensus to revive this sector? Given that industry is reeling under heavy inflation, high bank rates (not only interest rates), high transportation charges, wages and consequent low sales because people do not have purchasing power. The consensus is all these are to bring rates down. But, the reality is there is little effort to do so.

Additionally, there is unanimity that jobs need to be created as the country cannot subsist on doles like MNREGA, which is leading to Government coffers going bankrupt. Yet, jobs are not being created which is leading to rising frustrations manifested in people turning to crime, looting, burglary etc. Does it require a consensus to contain this?


Thus, the issue of slowdown is not because of lack of consensus but is despite that. For the past many years, the economy has been steam-rolled to follow a particular “reforms” path. Plainly, a monocyclic view of pressing the Indian economy towards foreign investment which is projected as the panacea. With those differing being called retrograde.


Undoubtedly, the lack of consensus is not because Parties want to score brownie points, but that no Party wants to share the blame for the Government’s lapses. In today’s political scenario, the Leftists, rightists or centrists have similar thinking. All are for liberalised globalisation, even if they do not understand its deeper purport.


Importantly, the problem of our polity and economy lies in Parties having a similar thinking process. Had there been divergence, it would have led to vibrant political debates aimed at finding economic and political solutions.


Another flaw in the system is to accept that all ills in the country are due to turmoil in the global economy. This is fallacious. The world has an expanse wider than Europe and US; India itself is the size of a sub-Continent. Recall, not long ago the country had a vibrant small-scale sector, cottage industries and was self-sufficient in consumer goods.


Sadly, this is a thing of the past. Integration with the World Trade Organisation has played havoc with the indigenous units wherein today Chinese toys, electronics, furniture and household goods flood markets thereby throwing millions out jobs.


It is a mere lack of foresight that the country allowed open imports of goods, which could easily be manufactured in the country? Has any Government ever taken any step to protect the small-scale sector? Now even larger companies like public sector BHEL, are under tremendous pressure from unethical practices of Chinese and other multi-national companies who dump their goods in the Indian market.

Significantly, this has serious implications. It not only destroys the indigenous capacity but also creates high unemployment. Wherein, the working class is the worst sufferer. Tragically, the country is lacking a policy to counter these nefarious designs.


All in all, the Government must take a lead by making all Parties sit together to evolve a path. This is not difficult provided the UPA Government is keen on breaking away from the hackneyed jargonised approach for “reforms”. ---- INFA


(Copyright, India News and Feature Alliance)

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