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| Is it s slowdown or crackdown? | | | | Union Finance Minister P Chidambram has recently said that India is nowhere close to recession and which all is happening was just a slowdown. The prime minister asked industrialists not to retrench people; the commerce minister gave his support to the prime minister’s call. The sentiment behind these calls is laudable: the idea of people begging on the streets is unpalatable, even in this country where many thousands have known no other life. But industries and services are facing a decline in their sales, they have no work for the millions they signed on in better times. What are they to do? This is where expert advice was necessary; no wonder it came from the finance minister. Young entrepreneurs may not have encountered hard times: P. Chidambaram told them that the time-tested response to a slowdown was to cut prices. Excellent idea — if prices come down, people will buy more, and demand will revive. Thus the three arbiters of economic destiny among them have worked out a recipe for the economic slowdown that was not supposed to touch India: cut prices, not jobs. If jobs and wages are left untouched, however, a reduction in prices will reduce profits. Producers’ profits are already under pressure. Would they not run out of money even faster if they follow the three arbiters’ advice? They have a point; but the finance minister has an answer. His banks are standing ready to give credit to failing industry. On his command, the Reserve Bank of India has flooded banks with liquidity and issued urgent advisories to them to release credit. All that anyone in trouble has to do is to go to the nearest bank and ask for a loan. But it looks as if the government’s banks are not being their usual slavish selves. They have parked much of the money they got in government securities rather than lend it. They have shut the window in the face of beleaguered industrialists. Some industrialists have influential friends in the government, however. The owners of airlines, for instance, met the aviation minister and asked him for Rs 4,750 crore. He was a real friend in need. He did not bat an eyelid; on the contrary, he told the airlines that he would ask government bodies such as airport authorities to defer asking them for dues. Everyone recognizes a handout. So now the Tatas have asked the government to give them Rs 7,500 crore towards the purchase of Corus. They made India so proud by taking over the British steel industry. It is in India’s national interest that they should own it. Everyone knew that the prime minister is a devotee of Jawaharlal Nehru. But his wisdom had been underestimated. Nehru nationalized the factories of unwilling industrialists; his successor has got them queueing up and offering their factories for nationalization. Some future Sonia Gandhi will bless him for having saved India from greedy private enterprise. For a prime minister who saved India from the consequences of socialism, this is quite an achievement. |
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