Economic Highlights

New Delhi, 3 April 2023

India Sitting OnATinderbox

K’TAKA POLLS TO DOUSE OR IGNITE?

By Shivaji Sarkar 

As Karnataka goes to the polls, a number of economic issues are coming to the fore, price rise, including drug price rise, manipulating prices by big firms, an issue flagged by Reserve Bank of India official, Aadhaar linking with too many things, Indians being robbed of their legally possessed cars, and private hospitals on strike in Rajasthan to oppose health care regulations. And not the least, rather the most significant Rs 45 lakh crore budget is passed without a whimper of a discussion. Is the country so callous!

Another issue that is being questioned is whether the issues and scams will decide the Karnataka polls or Congress leader, Rahul Gandhi’s next step on his jail or ‘Bail yatra’. Politics is warming up, concerned and possibly shaken what might happen if in the midst of the polls, the new Gandhi comes out with a masterstroke even to the extent of going to jail.

Nobody knows whether it’s possible or not. Home Minister Amit Shah’s repeated suggestions to Gandhi to appeal against Surat defamation jail judgment has made his next legal move a political concern for his rivals. Every way Gandhi remains at the centre stage to the discomfort of all, the ruling combine and even his possible future allies.

In this melee, would the people of Karnataka forget whatever they have lost or gained during the past five years. It has been in the news continuously, the hijab controversy included. Scams of the incumbent government have been one of the most read news, including civil works, education, police departments and even Lokayaukta probe in the allotment of a site to a government functionary.

If those are Congress charges, the BJP has also tried to turn the table against the Congress stalwart and former Chief Minister Siddaramaiah’s alleged involvement in a land deal. Would it be a scam versus scam scenario in the Karnataka elections and set the pitch even for the Congress and BJP!

The list is far too long. The one most discussed in the corporate circles is a latest report from a former RBI Deputy Governor Viral Acharya, now a professor with a New York business school. He says the five biggest industrial firms, which wield immense pricing power in the retail, resources and telecommunication sectors, contributing to elevated inflation be broken up by regulatory fiat or through competition commission of India as part of structural reforms.

“Creating national champions, which is considered by many as the industrial policy of ‘new India’ appears to be feeding directly into keeping prices at a high”, says Acharya. He cites risks over-leveraging by these firms leading to rising of prices and adds: “Such growth of conglomerates raises several concerns, such as the risk of crony capitalism, i.e., political connections and inefficient project allocations, related party transactions within their byzantine corporate organisation charts, over-leveraging due to an implicit too-big-to-fail perception and a lack of creative destruction by crowding out of entrants.”

Additionally, he continues, “Given that several risks have materialised in a rather short period of time in the case of one of the largest conglomerates, and over medium term, its deleveraging may slow down investments by this conglomerate, it is worth preparing for not having to deal with more of these, besides reducing their market power in product prices.”

It reads like a political manifesto to set the economy in order. If it becomes part of the ongoing election issue, it can change the dynamics if the voters appreciate it. If nothing, voters are perturbed at the high inflation that had touched over 15 percent of wholesale price index and continues to rise despite the rates having been lowered, still beyond RBI tolerance limit, and prices skyrocketing. Acharya’s deliberations are important as it pinpoints the reasons of price manipulations. But how would these be deleveraged!

It is embarrassing for the country. The people may like to know the details of the benefits or harms of privatisation. Was the 1991 liberalisation reason for allowing such a free price-rise syndrome? Remotely could this have any linkage with continuous Parliament uproar, to avoid discussion on the budget, that could have discussed the rising prices, its reasons and solutions.

The drug prices are scheduled to rise with the new financial year without a whimper. People go on suffering the onslaught. The worst has come from Rajasthan, where Congress government’s move to set the health care in order through the state’s right to health bill is being opposed by the private corporate hospitals going on strike for a fortnight now. So, what Acharya says can be overturned by an organised cartel? Should a welfare move being opposed with muscle power be tolerated by any government? Voters are observing each move of political parties of all hues as to how they respond to this brazenness.

The country is doling out free food to 81 crore people but proposals to link the doles or MNREGS wages to Aadhar has resulted in vociferous protest by daily wagers at New Delhi’s Jantar Mantar. The worse is linking the Aadhar with PAN, a silly insistence by the Income Tax Department. It forgets that all financial details become an easy pry amid a regime where digital loot has become the easiest.Every bureaucratic move has a social and consequent political cost. The elections address these and cause corrections.

That voters are not being addressed by the political class is a common refrain. The MLAs and MPs blindly go on enacting laws that hurt the people the most. They do it without a discussion in legislatures. Over ten States have enacted unconstitutional law of forced junking and acquiring by police of ten-year-old tractors and cars, forgetting that it is against the spirit of Article 300 that protects people’s properties.

It is becoming a potential issue of deprivation against ruling dispensations. Voters question the unholy alliance of pollution and automakers’ lobbies and why the governments are silent. These issues if not sorted out immediately would hit over 35 crore families.

The country is sitting on a tinderbox of volatile issues. The political parties in government or Opposition have the onerous task of addressing these, lest the country bursts into protests like those in France, Germany, UK or Israel. Will the Karnataka polls take the first step to correct the rising prices, joblessness, crony capitalism and turn India into the most successful country for peacefully solving critical issues by responsive governments? A hope will do. ---INFA

(Copyright, India News & Feature Alliance)