|Time to roll out the red carpet?|
I am not alluding to Dr. Manmohan Singh’s faith by addressing him as ‘Sardarji’ here. Sardar is a leader, and for the first ever time he spoke as one in his eight-year-long tenure. But all good packages don’t always have fresh and edible contents. In fact, the fine print on the package can be misleading.
Yet, I’d like to learn from the PM’s speech on the economic policy decisions for two reasons:
- I know precious little about the economy in terms of fiscal deficit and inflation. Therefore, I cannot see the issue holistically.
- He addressed the nation directly, instead of selecting a favourite media outlet to express his views, which is truly what a leader ought to do.
There were obvious political moments:
“No government likes to impose burdens on the common man. Our Government has been voted to office twice to protect the interests of the aam admi.”
The aam aadmi does not read party manifestos. The aam aadmi, and even industry bigwigs, like freebies.
The government has taken away the freebies:
“Let me begin with the rise in diesel prices and the cap on LPG cylinders.
We import almost 80% of our oil, and oil prices in the world market have increased sharply in the past four years. We did not pass on most of this price rise to you, so that we could protect you from hardship to the maximum extent possible…Much of the diesel is used by big cars and SUVs owned by the rich and by factories and businesses. Should the government run large fiscal deficits to subsidize them?”
This is utterly wicked. But, then, that is what politicians do. It is not as though the corporate guys will take out a morcha; Dr. Singh works in a FICCI manner, more or less. This is really a buffer comment to hide the small cars, small homes that will bear some of the burden. It may not be huge, but with this statement he has tried to build confidence, conveying that the rich will take the blows. Reminiscent of Indira Gandhi’s “Garibi Hatao” slogan that later transmogrified into the License Raj.
It is time to revisit history and the PM did just that. He brought in 1991 when he as finance minister in P.V.Naramimha’s Rao’s cabinet made the economy ‘free’. The problem was, and continues to be, that freedom will always be in the hands of a few; that it might percolate to the lower strata is a bonus, never the main concern. I don’t wish to be a killjoy, but weren’t the big scams with lobbying and kickbacks the result of just this free-for-all?
Fine, kerosene has been left untouched because it is used by the poor. This is simplistic thinking, especially when he asks:
“Where would the money for this have come from? Money does not grow on trees. If we had not acted, it would have meant a higher fiscal deficit, that is, an unsustainable increase in government expenditure vis-a-vis government income. If unchecked, this would lead to a further steep rise in prices and a loss of confidence in our economy. The prices of essential commodities would rise faster. Both domestic as well as foreign investors would be reluctant to invest in our economy. Interest rates would rise. Our companies would not be able to borrow abroad. Unemployment would increase.”
He has created a Robinhood scenario. Rich subsiding the poor. Only, the rich will get a backdoor entry through “building investor confidence”. Is this good for the economy in the long run? How many of the poor will be employed, how many health and education schemes will see fruition as a result? Of course, this is putting the cart before the horse. The reason is that the horse can gallop away and leave the cart behind.
The PM’s views on the world situation, however, cannot be discounted:
“You should know that even after the price increase, the prices of diesel and LPG in India are lower than those in Bangladesh, Nepal, Sri Lanka and Pakistan.”
“The world is not kind to those who do not tackle their own problems. Many European countries are in this position today. They cannot pay their bills and are looking to others for help. They are having to cut wages or pensions to satisfy potential lenders.”
There is absolutely no doubt about this. India has remained relatively unsullied by the fall of the big economies, but who had to bear the brunt? And who were the people responsible for part of the major bungling? Wall Street. Big men with big greed.
His emphasis on global investment is a huge concern.
“The world is not kind to those who do not tackle their own problems…I am determined to see that India will not be pushed into that situation. But I can succeed only if I can persuade you to understand why we had to act.”
It is, indeed, better for a nation to let its citizens work on the money than depend on loans directly. The “begging bowl” syndrome has not afflicted India to a great extent.
And this, the country can be proud of. The country should also be proud when people question it, for only then can there be true progress. India is not a single state whose development module can whitewash its other ills. To be more blunt, Manmohan Singh is not Narendra Modi.
We all know that there is a need for growth, but it cannot happen with a magic wand. In the process of the economy being stabilised, there might be little tremors. Can’t help but paraphrase Rajiv Gandhi’s comment (“When big tree falls, earth will shake”): When big tree is planted directly in the soil, there will be some mud that will come loose.
At this moment, my ‘aam aadmi’ imagination can only conjure up diesel-guzzling SUVs being splashed with sludge.
© Farzana Versey