Economic Highlights
New
Delhi, 17 August 2012
Government Failure
SLOWDOWN DESPITE CONSENSUS
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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