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Thursday, November 14, 2013

Ask Not For Whom The Bell Tolls...



Ask Not For Whom The Bell Tolls…

Apart from demanding sympathy from the people for the sacrifice of the Gandhi family who have lost three of their members tragically, Congress has rolled out the same old pitch  about ‘Inclusiveness’, implying it somehow has a monopoly on this.

Economic innovation is, inexplicably at near zero and thus a huge disappointment coming from the Party that has been in Government for most of the time since Independence. And implementation on all fronts is even at a minus on a relative basis! Sometimes it appears that the Congress Party’s much publicised ‘concern’ for the poor needs a large pool of voters, some 300 million people at least, to stay poor in perpetuity.

The Congress Party may not have anything new to offer going into the general elections in 2014, but are certainly very keen on being re-elected. It is banking on its ‘Povertarian’ platform. Its predictable pitch includes dollops of economically damaging and badly administered Welfarism, full of more leakages and corruption than ever before.  

Congress Vice President Rahul Gandhi has made quite a symbolic point of visiting villages and sleeping in the huts of the poor over the years. But as for changing things- even in his own impoverished constituency, let alone at a national level, there is very little done.

As for ‘Inclusiveness’, Congress’s own grisly record on murder and mayhem is glossed over. The most glaring is the 4,000 Sikhs killed over three days in October-end and November 1984 in the Capital of Delhi. Not so long ago, there was a bloody clash between the hordes of refugees from Bangladesh, encouraged by the Congress Party to the point of a demographic shift, and the angry native Assamese, in Congress ruled Assam. There are scores of other instances over the years, in Bihar, in UP, in then Congress ruled Gujarat, and other parts of the country. And yet, Congress thinks nothing of pointing fingers at others probably banking on public memory being short.

There is, besides this hypocrisy, a bankruptcy of new ideas, particularly modern ones. This disappoints our highly aspirational citizenry, a majority of whom are very young and many of whom are Muslim. At the same time, the international community, that had high hopes for India, is disappointed with India’s mismanagement 0f its affairs.  These high hopes have now been transferred to BJP’s prime ministerial candidate Narendra Modi, who has a solid reformist image and a reputation both for administrative efficiency and delivering economic growth. The excitement is growing as NaMo is being received rapturously by huge crowds wherever he goes around the country.

Eminent economist and former Finance Ministry mandarin Shankar Acharya writes in the Business Standard that it is too late for the UPA to make any impact on the economy in its remaining months in power. This, just as the wholesale price index (WPI) hit over 7%, brought on by the obscene price of vegetables. The retail price index, of course, has been in double digits for more than a couple of years running, and almost everyone is feeling the pressure.

The bad news keeps pouring in on every aspect of the economy including the much vaunted Service Sector, which accounts for over 50% of the economy today. Even IT is struggling despite the fall in the value of the rupee, partly because the customers in the US and Europe are themselves in bad shape. And because we have, by and large, not learnt how to climb up the value chain of IT software throughout all the boom years gone before.

The Export sector is doing better because of the beaten down rupee, but still not very well. Besides, it accounts for around 12% of the economy. Manufacturing, where we have been falling behind for years due to dismal infrastructure support- roads, rail, power, water, land, is in the doldrums, and employment numbers, despite a large pool of qualified people, are not really growing.

Shankar Acharya implies that all of it is the consequence of previous ‘folly’ because the ‘wisdom’ of policies, if any made, is certainly not showing results. There is always a time lag. 

The prime minister may well call policy-making ‘complex’ as he did at the CBI’s 50th Anniversary function, but the end results have been unimpressive under UPA rule.

Mr. Chidambaram’s present tenure is marked by the highly publicised VCES scheme that reprises his VDIS Scheme in a previous turn as Finance Minister. Will it succeed? Perhaps, but the yield is unlikely to put a dent in our economic woes. Apart from this initiative, by choking off gold imports, the CAD which was getting out of hand, is showing a sharp reduction, and might help the value of the rupee. Provided of course that the US does not begin tapering its stimulus which badly impacted the rupee months ago when it was expected to begin by September.

The retrospective tax provisions, sprung in a fit of high-handedness, are still on the table, despite the negative reaction of almost all would- be and existing foreign investors.
Indian born Indira Nooyi of Pepsi recently announced that her company was going to invest some 33,000/- crores up until 2020 in ‘manufacturing,  agriculture, infrastructure and innovation’, but India is no longer a ‘go to’ investment destination for most foreign companies. This, she said, is because of multiple reasons, including the economic slow-down on top of particularly high corruption, red-tape, difficult working conditions, the policy paralysis, and that retrospective tax slap administered to Vodafone.

The UPA, seen to have mismanaged the economy and reforms process, is widely expected by the foreign direct and institutional fraternity (FDI & FII) to be voted out of office in 2014.
While all macroeconomic efforts, says Acharya, is meant to reduce inflation and promote growth, the UPA has clearly failed to do either! Is it therefore any wonder that Narendra Modi and his development politics is pulling ahead of  UPA’s retrograde ideas? There is talk of a Modi Wave in the offing, and the country and the world is waiting.

(1,002 words)
November 14th, 2013

Gautam Mukherjee

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