When there are signs of income not meeting expenditure what would we do? Cut down on luxuries, reduce the quantities that we consume and spend efficiently. But what if we continue splurging on movies and beer but cut down on food, education and in case of those with families, their own children's education and health? As if it this wasn't enough, all assets that can produce any income are given away for free and those that produce income are sold in bits and pieces to sustain the family. That is exactly what the government is doing right now. It signs multi-billion dollar defence contracts (a & b), has set up an aid agency with a fund of over 15billion US dollars (c), sells of stake in profit making PSUs and sustains loss making ones (Air India) and throws away resources to crony capitalists. In addition, it is also increasing inefficiency in its spending and is like buying a rickety worn out,leaky petrol vehicle, always filling it to the full and roaming around without going anywhere near the objectives simply because the head of the family is being promised more years at the head by a few loyalists. These loyalists would do the same to any other from the family who is willing to undertake more spending measures.
When considered on their own, these policies have merit. Coal blocks were allotted to increase power production and cement manufacturing, but no one bothered to regulate the pricing of coal and cement produced. Revenue maximisation was not the government's goal, but that was the only goal for several companies who kept hoarding spectrum and coal without exploiting it for prices to rise and sold off stakes in these companies which mean that benefit of low cost access to resources were cornered by these fake companies that were allotted resources. The government's response to the Supreme Court judgement on the Presidential reference related auctioning of resources point to more such instances of resources being available for grabbing by those with sufficient contacts.
Selling shares in PSU is fine- government should keep its head out of business, promote competition and involve only in essential services to the people like public transport, education and health. But government simply wants to withdraw from every such service- 25% reservation for socially and economically backward children is a fine step, but that does not absolve the government of its responsibilities to run and maintain schools to protect the Right to Education. By providing managed care, euphemism for private control of the healthcare sector, it is disregarding its own duties. It should also mean preserving profit making entities and disposing off liabilities. But crippling profit making bodies and then selling them for scrap or pouring money down the drain is not sound economics- the highly profit making routes to the middle east available during prime time was allotted to private carriers. The government also regularly withdraws and cancels Air India services without prior information to this sector thereby stranding passengers and prompting them to distrust the national carrier.
There is little doubt about the dieselisation of motor vehicles and its use by fuel guzzling SUVs and mobile towers, but across the board increase of prices without measures like increased vehicle taxes, compulsory use of renewable energy for mobile towers etc to discourage increasing sales of diesel vehicles is non-effective and only adds to inflation. Even after price hike, diesel price is lower than petrol and so all it does is reduce the fiscal deficit. Tax on non-commercial vehicles, differential pricing and adding renewable energy for mobile towers would have been more effective and would have tackled more issues like environment concerns as well.
By allowing FDI in retail, government has only opened the sector for exploitation by foreing MNCs. Do we not have the capital and technology to track, transport, store and preserve our agricultural produce? Flipkart and dozens of courier services trace all its packages and give advanced estimate of delivery dates. If these organisations, with a fraction of the government's and existing Indian retailer's capabilities and networks can do it, why can't it be implemented by us? The goal can be met by our own efforts. Moreover, why will a foreign investor be interested in helping our agricultural sector if we cannot do it ourselves?
The goals are fine, but the decisions taken to implement them are flawed and will not even contribute in the slightest to achieving these goals. In fact, it will only favour a small section of the population, address problems only incrementally and leave out the larger issues of concern. So, since decisive action is absent, what can be done is decisive withdrawal. By simply withdrawing from all activities, in agreeing to the neo-liberal, market-oriented, minimalist state and new public management shibboleths, the government is condemning people to the vicissitudes of economy whereas it provides stability to multi-national corporations through Bilateral Investment Promotion and Protection Agreements(e).
This withdrawal also means policies like withdrawing subsidies and support mechanisms to the people. As I have mentioned in previous posts, many of these subsidies involve high leakages and many who require support are excluded from benefits whereas the real beneficiaries are the middle-men and traders and administration- diversion of grain to open market, black marketing and hoarding facilitated by appeasement of officials. By claiming to cut down, government tries to raise public voice for the maintenance of a system that does little benefit to the public but sustains a huge machinery of corruption. It is a bluff, it would not want to shut down a system that so nicely ensures steady income for many and generates figures that can impress development activists.
But there are no attempts to reform and make sure the benefits reach the targets, set up adequate storage for times of dire need, reduce rotting of stored grain and make sure it is not exported simply because we do not have adequate storage capacity. Right now, huge quantities are rotting due to pathetic storage conditions and millions go hungry. Yet India was one of the highest exporters of rice (f & g) and the drought-like in situation of 2012 could hit rice output. Not possessing adequate storage facilities is used as excuse to export rice which will drive prices up in a critical year and drive millions into starvation.
It is unfortunate that the real issues are not tackled and there are only attempts to attain goals through contorted, incremental measures which rarely benefit the target population. If this continues, it is not just the economy and stock-exchanges that will take a nose-dive, but the many who claim to protect the aam admi while actually fooling them might just find themselves out of jobs.
When considered on their own, these policies have merit. Coal blocks were allotted to increase power production and cement manufacturing, but no one bothered to regulate the pricing of coal and cement produced. Revenue maximisation was not the government's goal, but that was the only goal for several companies who kept hoarding spectrum and coal without exploiting it for prices to rise and sold off stakes in these companies which mean that benefit of low cost access to resources were cornered by these fake companies that were allotted resources. The government's response to the Supreme Court judgement on the Presidential reference related auctioning of resources point to more such instances of resources being available for grabbing by those with sufficient contacts.
Selling shares in PSU is fine- government should keep its head out of business, promote competition and involve only in essential services to the people like public transport, education and health. But government simply wants to withdraw from every such service- 25% reservation for socially and economically backward children is a fine step, but that does not absolve the government of its responsibilities to run and maintain schools to protect the Right to Education. By providing managed care, euphemism for private control of the healthcare sector, it is disregarding its own duties. It should also mean preserving profit making entities and disposing off liabilities. But crippling profit making bodies and then selling them for scrap or pouring money down the drain is not sound economics- the highly profit making routes to the middle east available during prime time was allotted to private carriers. The government also regularly withdraws and cancels Air India services without prior information to this sector thereby stranding passengers and prompting them to distrust the national carrier.
There is little doubt about the dieselisation of motor vehicles and its use by fuel guzzling SUVs and mobile towers, but across the board increase of prices without measures like increased vehicle taxes, compulsory use of renewable energy for mobile towers etc to discourage increasing sales of diesel vehicles is non-effective and only adds to inflation. Even after price hike, diesel price is lower than petrol and so all it does is reduce the fiscal deficit. Tax on non-commercial vehicles, differential pricing and adding renewable energy for mobile towers would have been more effective and would have tackled more issues like environment concerns as well.
By allowing FDI in retail, government has only opened the sector for exploitation by foreing MNCs. Do we not have the capital and technology to track, transport, store and preserve our agricultural produce? Flipkart and dozens of courier services trace all its packages and give advanced estimate of delivery dates. If these organisations, with a fraction of the government's and existing Indian retailer's capabilities and networks can do it, why can't it be implemented by us? The goal can be met by our own efforts. Moreover, why will a foreign investor be interested in helping our agricultural sector if we cannot do it ourselves?
The goals are fine, but the decisions taken to implement them are flawed and will not even contribute in the slightest to achieving these goals. In fact, it will only favour a small section of the population, address problems only incrementally and leave out the larger issues of concern. So, since decisive action is absent, what can be done is decisive withdrawal. By simply withdrawing from all activities, in agreeing to the neo-liberal, market-oriented, minimalist state and new public management shibboleths, the government is condemning people to the vicissitudes of economy whereas it provides stability to multi-national corporations through Bilateral Investment Promotion and Protection Agreements(e).
This withdrawal also means policies like withdrawing subsidies and support mechanisms to the people. As I have mentioned in previous posts, many of these subsidies involve high leakages and many who require support are excluded from benefits whereas the real beneficiaries are the middle-men and traders and administration- diversion of grain to open market, black marketing and hoarding facilitated by appeasement of officials. By claiming to cut down, government tries to raise public voice for the maintenance of a system that does little benefit to the public but sustains a huge machinery of corruption. It is a bluff, it would not want to shut down a system that so nicely ensures steady income for many and generates figures that can impress development activists.
But there are no attempts to reform and make sure the benefits reach the targets, set up adequate storage for times of dire need, reduce rotting of stored grain and make sure it is not exported simply because we do not have adequate storage capacity. Right now, huge quantities are rotting due to pathetic storage conditions and millions go hungry. Yet India was one of the highest exporters of rice (f & g) and the drought-like in situation of 2012 could hit rice output. Not possessing adequate storage facilities is used as excuse to export rice which will drive prices up in a critical year and drive millions into starvation.
It is unfortunate that the real issues are not tackled and there are only attempts to attain goals through contorted, incremental measures which rarely benefit the target population. If this continues, it is not just the economy and stock-exchanges that will take a nose-dive, but the many who claim to protect the aam admi while actually fooling them might just find themselves out of jobs.
