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It’s
wrong economics
April
09, 2008 |
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HOW
fortunes can tumble in a fortnight is peculiar
to politics. The ruling Congress was on top of
the world after giving a popular budget and providing
Rs 64,000 crore to farmers for waiving loans.
The party had also a gleam in the eye over the
hike in the salary of civil and military servants,
amounting to Rs 19,000 crore. Calculators were
out to count the increase in the number of voters.
(The Lok Sabha elections are due in less than
a year).
However, abnormal price rise has unhinged the
Manmohan Singh government. There have been frantic
meetings by the Cabinet and its sub-committees
to take measures to bring down inflation which
is around 7 per cent. Every one, particularly
the Left which is supporting the government from
outside, is gunning for the Congress. The party
is itself looking for shelter. It is already perturbed
over a pre-price rise survey showing the Congress-led
coalition losing 39 seats and coming down to 177
in the 545-member Lok Sabha if elections are held
now.
The Congress has itself to blame. It had made
people believe that it would not allow the price
of essential commodities like wheat, rice pulses
and edible oil to go up. This impression got deepened
on the belief that since Prime Minister Manmohan
Singh and Finance Minister P. Chidambaram was
among the best economists in the world, they would
manage to control the price. Theirs job was, however,
to convince the electorate that the Congress-led
government could do what others would not be able
to do.
Knowledge of economics is one thing, but adopting
it in a pragmatic way is another. I recall when
Lal Bahadur Shahstri became the Prime Minister
he said at his first press conference that the
topmost task before him was to check food prices.
He succeeded in doing so. His was a pro-people
approach, not theoretical.
The problem with the high-flaunting economists
is their policies are pro-rich to whom the high
cost of living does not matter. An increase of
20 to 25 per cent in the price of essential commodities—as
has happened in India in two weeks—has broken
the common man’s back, not of the affluent.
But the government’s worry is not over the
price rise but growth rate. Although official
estimates stick to the growth rate of 8.5 per
cent, financial agencies do not think it will
go beyond 7 per cent. This is not to the liking
of high priests of economics.
Whatever else be the conclusion, it is sheer non-governance.
When the price rise is not anticipated even a
fortnight earlier, the fault is that of those
who are handling economic ministries. If the government’s
response is banning the export of Basmati rice
and threatening hoarders with dire consequences—this
is what the Cabinet has decided—it appears
that the government is bereft of ideas. There
are routine measures like closing the stable after
the horse has bolted.
The government’s policies—economic
reforms—are responsible for consumerism.
It has set into motion a new fashion of spending
which has little consideration for those who cannot
afford even food grain, much less the goodies.
There is more money in the market and more and
more people are chasing fewer and fewer goods.
Take food grains alone. The production in the
last one decade went up by 1.2 per cent per year
while the population increased by 1.9 per cent.
What is needed is more food production and more
land under cultivation.
Yet,
the government is all for Special Economic Zone
(SEZ), an area where there are no taxes. Till
recently, the arable land was acquired for SEZ
in the “interest of pubic good”
and given to industrialists. The Left too went
along till the people’s agitation made
the change in policy: not to give cultivable
land to SEZ.
In fact, the entire agriculture policy has been
wrong for some years. Our per capita food production
is back to the 1970s level. According to the
Home Ministry, “predisposing factors”
were failure of land reforms to provide tenants
with security of tenure of fair rents, or to
correct inequalities of landownership through
redistribution of land. This is too much of
a radical approach for a government which believes
in the theory of survival of the fittest.
What India needs is another green revolution.
This requires meticulous planning and hard work.
But the government only flaunts money which
it can utilise to buy food grains from abroad.
But there is no surplus available anywhere.
When five million tons were imported a couple
of years ago, there was no shortage. The deal
was meant to make money on the side because
the price at which the wheat was bought was
excessively high. No inquiry has been made because
the fingers are pointed at Agriculture Minister
Sharad Pawar. (Most of imported wheat was uneatable).
The earlier forecasts of this year’s production
were rosy. All of a sudden, the produce is short
of 20 to 30 million tons. It is a huge miscalculation
which should see some heads rolling. Yet, the
miscalculation may have been deliberate so as
to allow hoarders to charge a fancy price. The
nexus of hoarders and politicians is no secret.
The government has yet to explain why it allowed
private players in the field. They brought the
produce directly from farmers. Private players
or big firms have their godowns full. Food grain
is still available from there. But who can conduct
a raid when top politicians give hoarders protection?
The situation is so serious that it demands
a concerted approach. Yet almost all political
parties are exploiting the situation. This may
well be at the cost of unity which the country
needs most at this time. What they do not realise
is that there can be food riots if what we have
is not judiciously distributed and if hoarders
go scot-free.
Water is another thing which may one day cause
riots. I do not know how sound is the proposition
to link rivers, but water should be on the concurrent
list of the Constitution. Pakistan which proposes
to do away with the concurrent list altogether
should think seriously about the repercussion.
Common problems like river water and environment
cannot be on the exclusive list of states.
India has examples of water disputes. Tamil
Nadu and Karnataka are always quarreling over
the water of Cauvery. Early this week, a pro-Kannada
group vandalized cinema theatres screening Tamil
movies and a Tamil Sangam office in Bangalore
over a Tamil Nadu water project at Hogennakal.
The central government is practically doing
nothing. It leaves such problems to the Supreme
Court. Had it been possible, the government
would have even left the shortage of food grain
in the domain of courts.
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| ©
Copyright 2008, All rights reserved. |
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