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Hostage to the past

THE government is anxious to showcase its economic performance in the last two years.

Hostage to the past

In progress? We are not investing in other countries because there is no capital.



Arun Kumar

THE government is anxious to showcase its economic performance in the last two years. There are programmes and TV appearances to showcase  achievements. The PM has asked all BJP MPs to go to their constituencies to talk about the achievements of the NDA government. Why the anxiety? If the achievements were clear to all, there would not have been the need to do this extra bit of publicity to convince the public. The question is: what are the achievements and why are they not so apparent to all? 

The NDA government came to power two years back on the promise of bringing ‘acche din’. The common man who had been suffering on account of high inflation, reduced rate of economic growth which was also jobless, balance of payment difficulties, decline in the value of the  rupee compared to the dollar, corruption, and so on, under the UPA took the bait and voted the NDA to power. India’s international rating had also dipped due to the ‘policy paralysis’ afflicting the UPA government.

At the end of two years of NDA rule,  many still ask when will ‘acche din’ come, because there is a perception that little has changed. Of course, the negatives of the UPA have disappeared. Some concede that two years are not enough to judge a government, but they also despondently ask when will things change? Doubt has crept in even among the supporters of the BJP. This is especially so, given that the agenda seems to have changed from development to social engineering. The NDA’s promise of bringing back black money hoarded abroad within hundred days has been seen to be a ‘chunavi jumla’ and the suspicion is that many other promises may also be just that.

In statistical terms, the rate of inflation has come down, but food prices still badly hurt the common man’s budget. The price of all services, like school fee, medical expenses and transportation have risen, but they are not reflected in the inflation index. So, while the government claims that prices are going down, the public does not accept that. The government has been lucky that commodity prices (like petroleum goods) have globally declined due to slowdown in the global economy. This has reduced the pressure on prices. But it also signifies that India’s exports that have been declining for the last 15 months are unlikely to start rising. It has also meant that steel industry, etc. have suffered. All this makes it that much difficult to raise the rate of growth of the economy.

The government claims that growth rate is more than 7 per cent but the public feels the pinch with agriculture suffering two years of drought and industry barely growing in the last two years. The services sector that has been the driver of India’s growth for the last three decades has slowed down. Real estate and finance sectors have faced a deepening crisis. Small traders are affected by the rise of e-commerce. Decline in trade, slowdown in industry and agriculture has led to a slowdown in the transportation and storage sectors. Capacity utilisation is down everywhere, leading to a further slowdown in all sectors. Interest rate cuts cannot help in such a situation. But the government has tried to blame the RBI for not cutting interest rates faster and the RBI has also been a frog in the well following conservative monetary policies. There is a needless controversy between the RBI and the Ministry of Finance on these issues which makes the situation look worse. All this has meant little job creation, especially in the organised sectors of the economy. Youth (Patidars, Jats and in universities) is agitated at lack of opportunities.

Investment is the driver of growth in the economy, but that has slumped from a peak of 38 per cent in 2007 to the present level of around 30 per cent. This is the principle cause of the slowdown in the economy. The government is harping on foreign investment, but that is only 10 per cent of the total investment and not a solution to the investment problem. To highlight its achievements, the NDA keeps emphasising how much investment it is getting from which country. For a nationalist government, is this something to be proud of? Why are we not investing in other countries? Because we lack both capital and technology. The private sector is not investing adequately because of low capacity utilisation and over investment in the infrastructure sector. Due to the rising NPAs, the banks are wary of giving out loans and this is captured in one of the slowest rise in money supply in the last decade and more. The public sector has been constrained by the attempt to keep the fiscal deficit down under pressure from international agencies. Investments have also been constrained by slow decision-making due to over-centralisation in the PMO — a different form of ‘policy paralysis’. There is severe need for decentralisation of decision-making, but that is missing even though the centralising Planning Commission is now gone. 

The government is seen to be long on promises, but short on delivery. The NDA’s publicity machine is good, but this can only give limited gains. Schemes like Jan Dhan and Swachh Bharat, announced with much fanfare, are suffering due to tardy implementation. Smart cities, bullet train, massive expansion of highways are seductive ideas, but not only are the road maps for their implementation not clear but also their execution may aggravate the growing disparities and displacement in society with consequent aggravation of the social and political problems facing the country. Is anyone looking at the overall picture, or are the different wings of the government only focusing on the parts? The latter case has become apparent and that is coming in the way of the delivery of ‘acche din’. There is need for course correction, but would that amount to an admission of failure?

The NDA government is constantly fighting the ghost of the UPA by comparing its performance with that of the latter. While it has taken up many of the programmes that were initiated during the UPA regime, it does not wish to admit that and wishes to show them as its own initiative. Why not stand on its own and create space for itself? There is no real break in policies with the coming of the NDA since they are hostage to the dictates of international bodies and not based on the needs of the people. This is the NDA’s real dilemma at the end of its two years rule.

The writer is a retired professor of JNU

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