Economic mess is of UPA’s own making


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3 Mar 2013

 
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Economic mess is of UPA’s own making

Arun Jaitley, leader of the Opposition in the Rajya Sabha, has an interesting take on the Budget. He says that the Government is behaving like the wayward son who, after killing both his parents seeks leniency on the ground that he is an orphan. Well P Chidambaram and his apologists too crave for your understanding, arguing that the economy was challenged. People would have been appreciative of the constrained economic conditions had they not been convinced that the Government itself was responsible for creating them in the first place. Indeed, they had every right to be angry with the ruling coalition because it was its gross mismanagement of the economy that had caused them untold hardships.

The drift and dithering, the policy paralysis, an unending series of humongous corruption scams etc. were certainly not the doing of anyone other than the ruling politicians. It is no use blaming the high crude oil prices in the global markets or the hunger of Indians for the yellow metal for the burgeoning current account deficit. If a few weeks ago you could take tough but necessary steps to raise the pump price of petrol and diesel and cap the number of subsidised cooking gas cylinders in order to align these prices as far as possible with the actual costs, why couldn’t you have done the same two years ago? Because you were sleeping on the job.

Likewise, if the country’s appetite for gold remained unsatiated, why weren’t minimal steps taken in time to make household savings attractive for middle-class Indians? With the negative returns on post office and other savings instruments due to the double-digit inflation, if those with meagre surplus incomes went for gold as a hedge against a rainy day, you could not blame them for causing an adverse balance of payments situation. So, look yourself in the mirror. You are the ones who have caused this dire economic crisis, nobody else.

Mercifully, the situation is not as grim as it was in the early 1990s when we had to pledge our gold with the Bank of England. It was only because we have a cushion of some $300 billion dollars in forex reserves. (Mind you, Manmohan Singh was the economic adviser to the Congress-supported Chandra Shekhar Government when the decision to pledge gold was taken.) But this is mostly hot money and can disappear as easily as it had come unless we can put our own house in order.

Here again the Government did everything possible to frighten potential foreign investors in share markets and actual projects. It was economic idiocy of the first order to slap taxes with retrospective effect. It was sheer arrogance to try and reverse the order of the highest court in the land and insist on raising demand against Vodafone. That sent a wrong signal to the global financial markets. Notably, the rupee has devalued by over 25 per cent in the last couple of years thanks to the rotten economic policies of the UPA.

Again, if the Sonia Gandhi-led National Advisory Council was out to seek cheap popularity by ordering the Government to distribute largesse to all comers, the Government, and not the NAC, was to blame for messing up the nation’s finances. Responsibility without accountability might be Sonia Gandhi’s prerogative but the Government got it completely wrong when it behaved as if it was accountable to her and not to the people of India. However, it is the people who are being made to pay the price for the economic mess created by the profligacy of the Government.

Enough has been said by economic pundits about the unreliability of Budget figures, about a mismatch in projections for expenditure and revenue growth in the coming year. Even the fiscal deficit projections for the current and the next year have evoked wide skepticism, though the Finance Minister’s anxiety to impress the credit ratings agencies is understandable.

Since Chidambaram began his long and rambling Budget speech by acknowledging that the ‘economy is challenged’, one is reminded of a popular Talat Mehmood song from a Bollywood film of the fifties – a period when lyrics and music were in perfect sync and made listening to film music a great pleasure — Sab kuchh luta ke hosh mein aaye toh kya kiya, din mein agar chirag jalaye toh kya kiye.

Really, the corrective steps in the Budget might prove to be a case of too little, too late for the common man to feel any relief from a backbreaking inflation and a complete lack of economic opportunities.


Virendra Kapoor, a freelance columnist and commentator on current affairs, is a former editor of Free Press Journal, Mumbai. He was also a senior editor of Indian Express, Delhi.

(c) NiTi Digital. Reproduction and/or reposting of this content is strictly prohibited under copyright laws.


 
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  • Bapty.s

    MR. KAPOOR. THANKS. FOR. PUTTING OUT. THIS. ARTICLE. ,IT WAS VERY. NECESSARY. ,JUST. IMAGINE. TWO FULL DAYS. OF VIRTUALLY ALL TV CHANNELS, MEDIA. GREAT SO CALLED ECONOMIC PUNDITS ,ACTIVICTS, DIFF. SITTING AROUND A TABLE. DISCUSSUING. WORD BY WORD. MR. P.C. BUDGET. I MUST. SAY. SOME CHANNELS. ,WHERE SPEAKERS WERE BOLD. AND RUNNING FAIRLY. MEDIUM TO. AVERAGE LARGE. INDUSTRY. QUITE CRITICAL. ,IN A VERY PRACTICAL MANNER,
    BUT MOST SHOCKKINGLY. OUR INDUSTRY ASSOCIATIONS, TRADE BODIES. ,AND. VERY WELL KNOWN BANKERS. AND SENIOR. INDUSTRIALISTS. ,MAKING WISHY WASHY STATEMENTS, AND. NOT. BOLD ENOUGH TO CALL A SPADE A SPADE. PEOPLE. AT. SUCH HIGH LEVELS. CAN’T BE STRAIGHT FORWARD AND HONEST ,SOME. SHEEPISHLY GIVING MARKS. TO P.C. FOR THIS. FAILED ECONOMY . AND BUDGET. AND IMAGINE. WHAT. 6 to. 8 out. Of ten.
    SHRI JAITLEYS. COMMENTS. ON THE BUDGET. BOTH WITHIN AND OUTSIDE. THE. PARLIAMENT. REALLY. ,REALLY. TAKES. THE CAKE . IN JUST. THIS. ONE. PAGE. HE HAS SAID VOLUMES ABOUT. THIS CONGRESS GOVT. OF 10. Yrs. ALMOST. ,THE LOOT AND SCAMS, THE BIRD HAVING FLOWN OUT OF THE CAGE. ,HAS NOT BEEN BROUGHT BACK , NOW. WHERE IS. PC. FISCAL BUDGETARY. CONTROLS. ,HE. WANTED TO INTRODUCE. EVEN UNDER UPA. ONE, WE SEE. LARGE. LARGESSE. BEING OFFERED. UNDER GARB OF. GARIBI HATAO. PROGRAM’S. LIKE NREGA ,NOW CASH TRANSFERS. BUT ALL GOING INTO SPECIAL POCKETS. ,AND. THE POOR. BECOMING POORER, .
    WITH SUCH HIGH INFLATION ALL HOUSEHOLD. USED PRODUCTS. ,GOING THRU. THE ROOF. BY THE DAYBY THEWEEK. ,AND FUEL PRICES. WHERE. WILL AAM ADMI. RUN TO? Cost of education, MEDICINES,HEALTH CARE, POOR. INFRASTRUVTURE. ,LOOK AT POWER COST EVEN WITHOUT POWER. INMOST. STATES.

    WE ARE FAST. REACHING TOBE. A BANANA REPUBLIC. ,UNDER CONGRESS ,IF WE ALREADY ARE NOT. ONE YET.

  • A

    A few things that led to the current mess off the top of my head -

    1. NREGA – Can someone explain to me how providing someone minimum wage employment for 100 days in a year, a year being of 365 days, be thought of as a wise idea ?

    2. The Golden Quadrilateral – Who thought that stopping most work on the Golden Quadrilateral was a good idea ? It brought employment to hundreds of thousands of village workers, most of whom are now under NREGA. It created valuable infrastructure, reduced the country’s oil import bills, and brought about the new age India. I suppose it was all four that this national project begun by Atal Bihari Vajpayee, the best prime minister that India had, was brought to a halt.

    3. Why was disinventment in hugely bloated, utterly inefficient, mostly corrupt, and utterly political PSUs stopped ? The UPA did sell some of government holdings in these PSUs recently, but only a small percentage, and only to cover a little of the fiscal deficit. Very similar to a spendthrift selling the family gold to pay his debts.




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