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.
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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.