Sunday, August 18, 2013

WRONG ECONOMICS OR WRONG INTENTIONS

Pseudo economics, artificial actions and on all policy fronts with the sole consideration of vote bank politics have pushed India into a situation which is certainly not the envy of even the best of the supporters of the present government of India. It is only the modern day equivalents of historical court jesters and those excelling in the art of boot licking and sycophancy of the power corridors to succeed in their own dubious self interests who are all praise for the government actions which have failed to produce any positive results  on inflation front, the mother of all problems related to the economic health of the nation and the resulting rupee devaluation and a dwindling economy. Common sense says that the buying power of the rupee in the Indian market directly has a strong bearing on its buying power in the international market and yet strangely the only action taken by government of India is tightening of monetary policy through reserve bank without much effect on the inflation front but significant deleterious effects on the Indian economy. The real challenges before India the potential superpower of 21st century seem to have gone in the background and the Indian economy has been caught in the vicious cycle of slowing growth, fiscal deficit and current account deficit. All actions by the hi fi economists of the country seem to be hitting a wall perhaps because no concerted and sincere effort is being made.
Economics, governance and inflation are so much interlinked that any slackness in economics or governance will not allow inflation to come down to acceptable limits till such time the benefits of NREGA and increase of per capita income through increase in GDP are nullified by the increase in unemployment and dwindling growth rates of GDP. Similarly, Fiscal deficit and current account deficit do temporarily come down with decrease in international commodity prices of gold, crude etc and will go up as the commodity prices rise again. Unless and until the oil economics is viewed and managed in totality, oil economics will be the eternal bane of Indian economy and India's growth story. On the gold front also, Indian rulers are conveniently and merrily forgetting the basic fact that it is the most convenient method of absorbing black money. Increasing import duty can be a short term deterrent for some but in the long run the demand for yellow metal will not reduce and it will give incentive to more black money generation through smuggling route.
Why is it that every measure to take care of the woes of the common citizen has to be detrimental to the country? The answer is pretty simple, all actions are being taken by keeping  the interests of nation and its poor millions in the background and the  baser political/human urges to gain control over vote banks at the forefront. Food subsidy bill is a representative case in point.There is no denying the fact that food security is the first basic big element in the chain of value addition in the earning ability of an individual, his health and India's march towards poverty alleviation. Food subsidy bill talks in terms of providing food to 50% of urban India (377 million) and 75% of rural India ( 833 million) at highly subsidised rates at a whopping cost of Rs 1,30,000 crore to the exchequer. Add to this the cost of pilferage, grain rotting and logistics inefficiencies, an estimated amount of Rs 60,000 -70,000 crore. A cost of about Rs 2,00,000 crore for meeting the basic food requirements of 800 million of Indian citizens after 66 years of rule by politicians totally dedicated to the cause of the common man. A matter to be proud of ???? Still let the country grant them credit for at least imbibing the motto 'BETTER LATE THAN NEVER'. But what is the compulsion of 
  • Giving it as a dole for the empty stomach, a liability of human body and not barter it against the output of two working hands which are the biggest asset of every human being. Why can't the polity ensure a monthly income of Rs 7000 for a household of five persons ( 35 days wages split between 2 adults ) or Rs 47 per day per head through a payment against work. The expenditure can be met by clubbing  together money spent on all the doles, freebies and the allied wastage, pilferage and administrative costs. Imagine the miracle of additional 300 (working days) X 100 million (working hands) available man days in a year, a figure even all the European nations combined together cannot dream of.
  • Not adopting a methodology that would be most cost effective and least contributor to mismanagement and corrupt practices that have been the bane of majority of government programs and actions.
Why can't these brilliant men at the top think of achieving food security, work security and health security all by a single action of good governance and forgetting subsidies. Perhaps the polity lacks the courage and will to tell their vote banks that they are getting everything as compensation for their labour and work. Or may be the vote bank tells them that payment against work is acceptable from polity that deserves to rule and not from polity which relies only on corruption and corrupt practices for ruling the country.