Economic Highlights

New Delhi, 17 May 2014

Modified Govt.

SPUR ECONOMY, END ‘KUTTA FUNDS’

By Shivaji Sarkar

The Narendra Modified politics should have electrifying effects on the economy. The nation expects it. The mandate of 335 seats is decisive. It robs the new government of any alibi that had at times made sailing difficult for Atal Behari Vajpaye-led NDA government and crippled the Manmohan Singh-led UPA.

The cheesed off voter has wiped out all the hindrances that regional satraps like BSP leader Mayawati, Samajwadi Party supremo Mulayam Singh Yadav or Rashtriya Lok Dal chief Ajit Singh, NCP or DMK used to do to hold the Central government to ransom.

This is the advantage of Modi and also the greatest challenge. The people would like him to function in a swift manner and not make the stock exchange the barometer of the economy, a folly Manmohan Singh did. It is the market of speculators to maximize their profits irrespective of political or economic conditions. Recent trends indicate corruption begins here. The sensex at 25,000 mark on the basis of a few selected shares of Ambani and Adani, indicates nothing except that investments have become dearer. Governance has to be decoupled from the stock market.

People want freedom from corruption, as still a lower functionary at the income-tax department does not allow assesses to go away from the office unless their palms are greased. It is so in all public dealing offices – the DDA, police, land registration offices and what not. The businesses want that these “kutta funds” (money for ‘dogs’) they have to maintain in their account books to be wiped off. Higher one goes the higher is the cost of “kutta funds”. Will Modi be able to do away with it?

Rising prices, over 42 per cent during last three years, hit family budgets. Clothing, medical care, education, eating out have turned dearer. Services taxes, VAT, luxury tax imposed by UPA Finance Minister P Chidambaram has made every aspect of eating out or purchases expensive. The alibi that the Government would not be able to do much in a weather-induced economy on prices of food products is unacceptable. Modi has to decisively function to halt the commodity forward market from hoarding, speculation and cut down prices. He has to learn the trick from Vajpayee, who effectively brought down inflation and gave a momentum to the economy.

The youth want jobs and the middle-aged want continuity. About 1.2 crore people join the job queue every year. Low 4.5 per cent growth during the UPA rule, weak spending - minus 12.2 per cent fall in consumer spending in 2013-14, industrial deceleration to 0.1 per cent, costly borrowing and policy standstill have heavily hit investment sentiments.

Additionally, manufacturing has shifted to China and Korea. This must be revived through a combination of measures by boosting confidence of the domestic investors, higher savings, fillip to manufacturing, sort of a neo-Swadeshi with selective acceptance of foreign direct investment (FDI). It also calls for a new FDI policy that would not be predatory.

Agriculture years for a focus to allow the individual farmer to boom and become part of the economic growth. There has to be a departure from corporate-induced farm growth and farm marketing that throws millions out of jobs. The farmer has to be made the pivot of the economy so that the 70 crore plus people dependent on the farm sector could thrive.

Empowering farmers and his associates has to be the mantra for the growth of new India. It would create new jobs, stop migration and give stability to the Indian economy. It would obviate the need to have silly unproductive schemes such as MNREGA and save the exchequer Rs 33,000 crore a year – a crucial input to check high fiscal deficit and raise public investment. Indeed, a properly managed farm economy could bring down prices, raise consumption, and add to the nation’s manufacturing and industrial growth.

The transport sector too needs a revival. The national highways, the National Highways Authority of India accepts, have become synonymous with high toll exploitation, bad roads, irksome slow movement and many avoidable law and order problems. The motto of Vajpayee for smoother movement has been replaced by the UPA’s motto of corporatized loot. Sadly, this has been extended to the airports and now, of late, railways too want to emulate. Public utility services have to be run for lubricating the economy and not create barriers.

If Modi is keen on changing the face of the country, he has to simplify travel be it by railways, waterways or air. Indians dream of a railway which they can board at his will. Complicated and corrupt reservation system needs to be changed and not be tied to so-called “dynamic pricing”. Fares have to be affordable so that even the poor could travel with ease. Trains have to run on time. Over 50 per cent of these run anything between 50 minutes and five hours behind schedule daily. An average Indian wants timely and not super services. It requires will and managerial skill.

Modi also has to take critical decisions. Money guzzling ventures such as Air India should either be closed down or leased out. Personalities such as former its CMDs, need to be taken to task and asked to pay for the losses of Air India. Their pensions be stopped and all that they have earned from additional post-retirement so-called semi-Government jobs should be confiscated. It also calls for a white paper on Air India. Not a difficult task or a man like Modi to give a message to the bureaucrats, who certainly are not above board.

The energy and fuel sector needs critical decision. The public sector oil companies have to be audited by CAG to find out “under recoveries” and wipe out the subsidies being paid to them. Gas price for Reliance and ONGC has to be brought down to make power cheaper. These are simple tasks but corporate involvement has made these difficult.

Finally he has to give the message that Modified government means a rule of the people and not either of Indian or foreign corporate. The BJP manifesto has hinted many of these reforms. The nation would wait and watch how Modi delivers to rid the country of corruption, price rise, joblessness, weak spending and slow growth. ---INFA

(Copyright, India News and Feature Alliance)