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| What the BJP failed to do | | |
Bharat Jhunjhunwala |
At its recently concluded meeting at Dehradun, the BJP's National Executive has expressed deep concern at the rising incidence of suicides among farmers. It has alleged that the package announced by the Congress is low on substance and high on publicity. Along with the provision of cheaper credit, it was necessary to implement policies to ensure that farmers get remunerative prices, they argued.
The BJP's approach is fundamentally right. However, the question to be examined is why are prices declining? It seems the culprit is free trade in agriculture produce that forces the domestic prices to follow the declining global trends. The price of wheat, for example, was heading in the upward direction recently but imports deprived our farmers of the gains that would have accrued. Thus the BJP should have argued that the country should avoid embracing the model of free trade in commodities in which a large number of people are making their livelihood. Instead it was necessary to adopt a policy of protectionism in sectors such as weaving, rasvanti, agriculture, etc.
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The second factor leading to decline in agricultural prices is that the world population is increasing only slowly. This is leading to stagnation in the demand of agricultural commodities while production is increasing rapidly. The excess of supply over demand is leading to lower prices. The solution to this problem is to shift our people from agriculture to the services sector. It is necessary for the government to establish centres in every district to provide training in sunrise service sectors such as online legal services, medical transcription, call centres, etc.
The BJP has demanded a ban on futures trading in agricultural commodities. It is apprehended that the recent increase in prices of agricultural commodities is due to cornering of supplies by big players in these markets. BJP's position is that speculative activities should not be permitted in commodities from which a large number of people make a living. The Party's concern is laudable. But we would also be depriving the farmers from gains from futures contracts if we ban the activity altogether.
The big players always have an inkling of the direction in which the market is likely to move. So they have less to loose from ban in forward trading. It is the small player who does not have information and is, therefore, lured into making contracts unfavourable for him. Futures markets provide this information to the small player as well. The farmer can now decide whether to sell his wheat at Rs 10 per kilo in April or Rs 15 in November. Therefore, instead of seeking a ban on futures trading the BJP should ask for the establishment of a proper regulatory authority along the lines of SEBI for the commodities markets.
The Executive has expressed deep concern at the rising prices. The present rate of inflation is around 5% per year, which is marginally higher than the 3-4% rate of the previous years, but is yet low by historical standards. The main reasons for the recent price rise are the high prices of imported petroleum products and rising global interest rates. The government has no control on either of these factors. Thus, instead of attacking the government for its inability to control price rise, the BJP should set a more modest objective of protecting the poor from its impact.
The government can reduce the rates of tax on items consumed by the common man such as coarse cloth, match boxes and bicycle tyres; and raise it on items of luxury such as chocolates and automobiles. The rise in the collection of Corporate Taxes indicates that big companies are making huge profits by selling their goods at high prices. Textile mills are making merry while the handloom weaver is dying. The BJP should demand that separate indices for price rise be prepared for the common man and the rich and the former alone should be controlled.
The Executive has supported the government's decision to set up Special Economic Zones but demanded that jobs be provided to those whose lands are acquired. While the demand has its merits, there is a need to think farther. The question is why can the facilities of SEZs not be provided in general areas? If the facilities sought to be provided in the SEZs are 'good' then let them be universalised. If they are 'bad' then the concept should be re-examined.
The main problem is governance. Budgets for the repairs of roads and telephone lines are subject to huge leakage. SEZs are being established because of the failure of the government to manage its employees. The honest Ministers do not have the mettle to face the ire of corrupt government servants. It has become necessary to establish SEZs to bypass this bad governance. But that will lead to exit of industries from the general areas into the SEZs. But we need to ponder if we want to build a country where industries are concentrated in selected areas behind fortified walls while corruption and dilapidated infrastructure abounds outside. The BJP should have demanded that the Government come out with a road map for improving the quality of infrastructure in the general areas too.
There is one glaring area of silence in the Executives deliberations that needs mention. The common man is wholly intimidated by the corrupt government employees and Ministers alike. But while the Ministers are accountable once every five years, the bureaucrats are beyond the reach of the people.
The common man has to pay huge bribes to obtain a drivers’ license, a coolie's permit, registration of a FIR in the Police Station and even to the clerk in the courts, who has to be paid facilitation charges. The dilapidated state of infrastructure is also due to the corrupt ways of the same combination of bureaucrats and politicians. In every department, there are a few honest officers who are posted in non-descript jobs or simply 'attached' to the headquarters because they do not collect and pass on bribe money to the politicians. The rot is so deep that an honest minister finds that his hands are virtually tied.
The salaries of government employees are generally about twice the per capita income in most countries. They are already about five times in India. Additionally they earn huge under-the-table incomes. The government has established a Sixth Pay Commission to further increase the salary of this lot. The farmers are committing suicide and the youth are unemployed but the government is busy addressing the concerns of the mostly corrupt government employees. There is a need to rein in the government employee. There was a need for the BJP to oppose any increase in salary of government employees. The experience of Ashok Gehlot in Rajasthan and Jayalalitha in Tamil Nadu indicates this is full of dangers. But the experience of Mayawati points in the opposite direction. There was a need for the BJP to take a clear stand on this issue that is of the greatest importance.
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