Economic
Highlights
New Delhi, 14 August 2017
Creating New India
PLAN A BIGGER CAKE
By Shivaji Sarkar
The 71st year of Independence
begins with the call by Prime Minister Narendra Modi for eradication of
corruption, poverty, terrorism, casteism, communalism to create a new India.
This is significant to reshape the contours of Indian society and economy.
Since the first Independence Day such calls
are being given. It is true that the nation has made progress. The standard of
living has improved. In 1970s, even the then Prime Minister Indira Gandhi said
so. But it is also true that disparity has also increased.
It is a fact that social discontent, may not
be the strife, is on the rise. Else on the day of August Kranti, (August 9,
2017) Mumbai would not have witnessed a silent rally by reportedly five lakh
Marathas. Yes, clannish, casteist protests of supposedly powerful social groups
like Patidars in Gujarat, Jats in Haryana, Gujjars in Rajasthan, farmers and
other communities across the country have become the norm. They all are demanding
jobs, reservations, loan waivers and other concessions.
This is despite a functional government since
2014. The Modi government has instilled hopes and flooded the nation with a
number of programmes from ‘Skill India”, ‘Mudra’, ‘Make in India’ and so many
others for almost every different group. The Prime Minister’s August 9 call is
significant. He wants to transform the nation. The accumulated problems, the
burgeoning population, scarce resources, the vast expanse of the country come
in the way.
So would the nation’s wishes to change it in
another five years remain a dream? It should not be so. But wishes alone cannot
be horses. Why during the last decades the nation could not achieve what it
wanted? The answer is the countrymen achieved it piecemeal. Some got it and
many did not. Why? The governments could not bake a cake that is big and
sufficient for all. Those who could pounce upon got a slice or more, others
just lustily pined for it. As they did not get, they got together in the name
of castes, communities, other groups to express their discontent.
The socialistic slogans, licence-permit raj,
high taxes that rob the earners, neglect of agriculture and it being treated
separate from the economic process, big industries, planning commission-NITI
Ayog, liberalisation-globalisation, anti-China protests have not helped.
The cake has remained small. The equity
remains elusive. The high earner is as dissatisfied at the taxes as the lowest
one who also shells out as high as him. India has not tried to get rid of its
impoverishing income tax – an average salaried person loses four to five
months’ wages. Higher tax collection (19 per cent more direct tax now) has not
added to the pace of growth. And the governments crib that production is
slowing down! How can production go up if people have to pay irrational taxes
and continuously face an inflationary situation? Except for 1998-2004, India rarely
had a stable price regime or real low inflation with adequate productivity and
high job growth.
Despite
difficulties, India is awake and making strides almost in all spheres. Its GDP
in 1950 was Rs 10,536 crore and now Rs 1.68 lakh crore. The First Plan, a
concept first espoused by Netaji Subhash Chandra Bose in 1938 when he was the
president of the Congress party after the Haripura Congress and later
implemented by Jawaharlal Nehru as Prime Minister was considered to be
revolutionary. It has helped the nation achieve success in space technology,
nuclear energy, industrialisation, IT, education, women’s emancipation and
overall improvement in living conditions.
In
1947 life expectancy was 32, now it is 68, a per capita income of Rs 249.6 has
become Rs 1.03 lakh ($1575), and in terms of GDP India ranks third after China
and the US. In 1947 only 1500 villages, 0.025 per cent was electrified, now 97
per cent of villages have electricity. Only 12 per cent of the population had
school education and now 74 per cent are literate.
It is also true that CAG has found fault with
every government department big or small. The latest RBI consumer survey in six cities of Bengaluru, Chennai, Hyderabad,
Kolkata, Mumbai and New Delhi for June 2017
shows the percentage of people who said their income growth was lower than in
December 2013 and March 2014, when the disenchantment with the UPA government
was at its peak.
The net responses have been negative for six
consecutive quarters now. Manufacturers have marginally increased employment.
The RBI surveys despite this points out that the people largely still are
hopeful of the job and other conditions improving by the next year.
The
median forecast of gross fixed capital formation (GFCF) for 2018-19 is 29 per cent
of GDP at current market prices, says the RBI. The GFCF in 2013-14 at current
prices was 31.3 per cent of GDP. Investment demand will get better, but it’s
likely to be a slow uphill task. It means the cake is getting smaller but hope
remains. This is what not just the government but even the opposition,
planners, policy makers and the common people have to give a concerted thought
to.
The road ahead is well known though not
marked. The NITI Ayog was supposed to play a pivotal role. However, its vision
document under Arvind Panagariya was flawed. It has to change its style of
functioning. Instead of coming out with documents in a hurry, it should hold
parleys across the country to find out the solutions to the social and economic
ailments.
The GST is a beginning but unless other taxes
and cess are drastically reduced and a humane approach to taxation is adopted, the
projected transformation may not be there. The GST has also not eliminated tax
on tax.
The solution is not simple. Neither is it
complex. The goal has to be increasing opportunities, protecting bank deposits,
make banking cost-free, keeping utility prices like electricity and petroleum
low and taking investment out of the private coffers. It needs a centric approach
with people having differences coming together.
Modi has the acumen and charisma to create
the societal dialogue and make all the moves together. The road is ahead. It
has to be trudged with all others. India is ready for the transformation. The
threads have to be put together. –INFA
(Copyright, India
News & Feature Alliance)
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