Economic Highlights

New Delhi, 22 October 2018

Economy In Poll Season

BIG CRISIS, DOCTOR MISSING

By Shivaji Sarkar

The ensuing Assembly elections in five States would be contested on critical issues -- jobs, wages, inflation, development and actual growth. As of now, the economy is in crisis. Prices are rising, the rupee is receding, farm prices are unable to match the inflation, cash crunch remains and businesses are in a fix!

It is also true that despite all this, the GDP is marking growth in statistical terms. So are the tax revenues. This gives a mixed feeling. Does the growth mean well-being of the people? Apparently, the people are said to be benefitting through 431 official programmes. However, the Opposition is clamouring on prices and the supposed corruption in the Rafael deal and Vyapam in Madhya Pradesh. But no one questions why over three lakh were recruited by non-productive police forces?

The people are keenly looking at all the parties. Very few possibly have touched the core. Hindutva, soft or hard, has become a common denominator. Is it because at the political plain, the players do not have an understanding of the hard hitting issues? Ram for the BJP and Rampath Gaman Yatra for the Congress are countering each other. Yes, the non-Muslim vote has become the target after many decades indicating that secular appeasement failed.

Except for softly nudging on the prices, the Opposition till now seemingly has lost the nerves to raise hard-hitting issues. The wholesale price index is an indicator. Since 2010, prices have risen by over 65 per cent! The political parties are at their wits end to control it, though they do not even recognise that spiraling prices are a problem. The bogey being raised is it cannot be checked. This is devastating and destabilising the Indian economy, as it leads to continuous wage rise, price spiral, job losses and upsets business and government expenditure pattern. It certainly is causing untold misery to the people and raising actual poverty or deprivation.

Most of the prices rise because of government policies, fees, rising fares of railways, buses, road and municipal tolls, repeated GSTs on products that should not be taxed. The GST has led to double taxation on many items, including house tax and many other services. It has made food expensive though the farmer continues to suffer.

Road construction itself has become a profiteering venture for the selected few. No political party has questioned the rationale of tolls despite over Rs 1.13 lakh-crore collection through petrol cess. Plus, no one has questioned why an eight-km stretch cost Rs 845 crore, when the average cost of construction is Rs 5 crore per km? The road toll, which some political parties promised to scrap in 2014, is rising annually and is irrational. The world over it is based on a factor of gradual reduction. The concept being if the part of the cost has been recovered, as in the case of the Delhi-Noida-Direct toll bridge decision of the Supreme Court, the residual would require less realisation or even none.

Taxation is equally irrational on most products -- automobiles being the starkest. One needs to question why should one have to pay three years of insurance premium on which companies do not give a dime in interest payment. Why should registration charges be at eight or more per cent? Why should one have to pay for parking charges, when every parking has high fee? It shows Indian bureaucracy or politicians do not know what they are doing to devastate the market.

On petrol prices too, the daily increase is uncalled for. Nobody has questioned the pattern. This apart, none has said that it is benefitting the private oil companies, who are prospecting oil from Indian shores at less than $40 a barrel and selling at $80 or more. It shows that there is lack of a will to check the prices.

Sadly, political players are apparently not in touch with the rural realities either. The farmers growing potato or wheat are not getting the MSP, which has been raised by the government on many crops. The cash crunch and raids by taxmen have convoluted the rural market. Payments which would almost be immediate are now delayed, which as a result retards business growth.

Similarly, neither has anyone talked of the Indian Railways gobbling up people’s money as it doing with its policy of no refund of fare for cancellations, nor has any political party demanded a probe into this unholy trend. It is also strange that despite billions of rupees of unethical earnings, how does the Railways remain financially sick?

Additionally, public sector road undertakings too have been recklessly increasing fares. Has anybody made it a poll issue, as it is the poor rail and road travelers who are the worst sufferers? It wrecks their economy as well as makes lives of students difficult.

Education itself, from primary to university, too has become very costly. While there is lip service expressing sympathy, no one asks why private universities should be charging such high tuition and other fees? It is pushing the student community under heavy debt. Besides, the quality of education suffers as the private universities do not pay the stipulated salaries, be it as per UGC or AICTE.

Political thinking on creating excellence in knowledge and education is too missing – a concern that was seen in the first and second Five-Year plans. Mere bragging on number of institutions is not the solution. Every year thousands of such institutions go out of business. The business chambers whisper about difficult conditions and high costs of operations. But lo! No political party talks of it.

Shockingly, the banks too have been looted by a few hundred Indians and rest of 99.99 per cent suffers. The high NPAs have slashed deposit interest rates, made bank deposits non-lucrative as the little interest accrued -- it is not earning -- is gobbled up by tax deducted at source (TDS), a detrimental concept. Over Rs 11,000 crore has been earned by “loss making” PSU banks from those who cannot maintain minimum balance. Billions are tucked away in banks on so-called “dead” accounts, which are not allowed to be revived. Has any Opposition party questioned this  or the rationale of taxing interest accruals that have hit the senior citizens and other poor earners?

India’s tax revenue, particularly income tax, as per statistics has gone up by about 16 per cent. So has refunds and actual collections are not over 6.6 per cent the Comptroller and Auditor General (CAG) said, in August. Despite this, the political parties have neither called for doing away with income tax nor vociferously raised the tax terror issue. The overall crisis remains but the doctor is missing!—INFA

(Copyright, India News & Feature Alliance)