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| Falling rupee takes many down | | |
Shivaji Sarkar
The state needs to
get rid of its
policy-paralysis and create an environment that is conducive to growth, investment and employment generation. But this requires a benevolent forward-looking economic policy People expected Prime Minister Manmohan Singh to address issues of inflation, sliding economy and rupee hitting a depressing low in his Independence Day address to the nation from the ramparts of the historic Red Fort. Instead, he was effusive about the over seven per cent growth during the last decade - one that is not discernible to the common man, the industry or the investors.
Employment prospects are bleak and the Prime Minister assures there would be a million jobs in a year. Neither the common man, nor the industry - the primary generator of jobs - believes it. This could be the Prime Minister's sincere wish but the road map is missing. Total jobs grew by 27 lakh since 2004 against six crore in the previous decade. The falling exports, rise in expensive imports, lack of an indigenous energy policy and eluding investments are adding to the problems.
The latest move by the Reserve Bank of India on repatriation of profits by corporates and individuals to check the falling rupee, though correct in many ways is not in sync with the Government's move to attract foreign investment.
The Prime Minister does not care to delineate his solution to the economic woes, to inflation touching 5.8 per cent and the rupee plummeting to more than Rs 62 to a dollar. This means that what one dollar buys could be purchased with Rs 62. It also means that all projections on poverty have become redundant. If we take the Planning Commission's figure of Rs 33 to ascertain poverty, the rupee slide has doubled that figure, as also that of the poor. The Standing Committee on Finance in its 72nd report on the number of below poverty line population states, "The committee notes with surprise that there is wide divergence between the aggregate estimates made by the Planning Commission and those submitted by the State Governments. The committee is thus constrained to observe that the estimation of poverty and the consequential identification of BPL household do not seem to have worked at the ground level". The Standing Committee on Rural Development found many lacunae in the implementation of the Mahatma Gandhi National Rural Employment Guarantee Act. Despite the fact that all States have not been able to allocate money from the Rs 40,000 crore a year for administrative purposes, Rs 6,381 crore was spent on administrative expenses, expected to increase to over Rs 10,000 crore a year. This effectively reduces the number of beneficiaries. Why should the nation tom-tom about a programme that cannot effectively benefit the poor?
Possibly the greatest admission of failure by the Government are the announcements of rising entitlements, cash benefit transfers, misdirected subsidies, food security Ordinance and MGNREGA. It is an acknowledgement that mounting costs have made living so expensive that people are finding it difficult to sustain themselves, hence must be given doles.People need jobs, the State needs to ensure food to them, a better health and education system. It requires a forward-looking economic policy. Today industrial growth is collapsing, and there is a bias against agriculture that sustains 70 crore of the people directly or indirectly. Mr Singh's address was silent on revitalising the prime farm sector. The country may have junked Mahatma Gandhi, but his vision of 'gram swaraj' that includes a vibrant farm sector manned by small farmers and entrepreneurs remain relevant to this day. The neglected Khadi sector was a vibrant medium to engage the rural populace. How long can programmes like MGNREGA prevent rural migration? A Pew Research Centre of the US study found that a whopping 92 per cent of Indians blamed the Government for the country's woes. About 49 per cent feel that the economic situation will remain or worsen in the next one year. Slow pace of reforms, huge fiscal deficit, rising inflation, corruption and falling rupee have hit their confidence.
The latest reports on Government and its departmental finances do not present a sanguine picture. Debts are mounting and expenditures remain uncontrolled, thus affecting the Government's delivery system. Allocations on many people-oriented and infrastructure programmes are bound to be hit by austerity measures. Would that mean more doles? People do not want concentration of activities in and around the national Capital and a few metros. The Government is in a quandary. The conflicts within National Advisory Council, the Congress and the Government have led to policy paralysis.
It is good to see an optimistic Prime Minister, though Finance Minister P Chidambaram does not exude that confidence. It's the reason why the latter increased import duty on gold to 10 per cent. What he earns through duties would be lost in policing smuggling, apart from throwing many jewellers out of job. Yes, all through there is a policy mismatch. This would only lead to further deceleration of the economy, galloping inflation and more problems for the people. (Courtesy The Pioneer ) |
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