Wednesday, December 11, 2013


It does not require much intelligence to see for a common man that Indian economy is rapidly on a slide with serious apprehensions about its impact on the lives of common man. Practically every item needed for a decent life is costing too much and the consumer products, especially are being repacked practically every 2-3 months with new MRP figures! Government continuously promises people that it is a short phase and things would improve "soon"! But no one is sure how soon such a change will take place! Under such trying circumstances, the latest report indicating that government is unduly favoring corporate industry through hefty tax concessions is indeed shocking. On one hand government is squandering the wealth of the country through unproductive "give away" schemes without bothering to control the resultant inflation while billions of rupees are written off as revenue forgone! Here is a take on this tragedy that is being unfolded by some informed critics which seems to have prima facie some substance.

"Had the massive tax concessions to India Inc., which is clubbed under the category of 'revenue foregone', were instead invested within the country, it could have created millions of jobs. While industrial production remained dipped, equally shocking is the massive hoarding of cash that the private sector has been stacking. By Mar 2012, India Inc was sitting over cash reserves of Rs 10-lakh crore. On top of it, a Credit Swiss report shows that the top ten big corporate groups in India have shown a six-fold increase in external commercial borrowings to reach a staggering Rs 6,30,000-crore. But these massive borrowings did not result in adequate returns thereby increasing the external debt. With so much of external borrowings and with cash reserves growing, what prompted the government to provide hefty tax concessions year after year needs to be investigated. In the last two years alone, Rs 11 lakh crore has been doled out.  Sadly, all this was allowed to happen when the prime minster knew that free market policies and deregulation were behind the economic woes. Instead of taking appropriate corrective steps he allowed the Indian economy to dither and slide. This is where he faltered. In fact, the solutions that are being proposed to prop up the ailing economy are the same that initially led to the economic downturn. More of the same will only add to the crisis. From recurring economic crisis being felt across the globe, what has clearly emerged is that the growth-oriented economic model has run out of steam. It has created wealth being concentrated in the hands of few while the income disparities have grown enormously. Just 300 people in America for instance have an economic wealth that is equal to half of the American population. This is not sustainable. Reversing the trend is possible. It doesn't need market ideologues, but people with wisdom to chart the new pathway. The solution lies in a shifting focus to the revival of the rural economy. Investments in agriculture, and manufacturing sector, along with a massive programme to enable rural communities to take control over natural resources has to be urgently launched. Hiware village in Maharashtra was once a drought-prone village. It is now a bursting rural market. It boasts of 60 millionaires. Replicating it across India would mean a massive creation of jobs and at the same time stopping rural-urban migration. Bringing prosperity in the rural areas will also mean redistribution of economic wealth. In short, the answer lies in self-reliance. As the prime minister himself had bemoaned, the globalised phenomena is hurting people. It is time therefore to urgently resurrected the system, and bring in an economic model that is people-friendly and environment-friendly. It has to begin by revitalising agriculture, the mainstay of the economy".  

In a recent economic analysis, a well informed policy expert bemoaned the decline of agriculture in this country because of the reckless policies being pursued by the present rulers at Delhi and economic growth is the prime casualty of this pursuit. Small farmers are suffering because farm labor has become too expensive to be afforded and agriculture is no more an affordable activity in the face of low support price being offered by the government. Logically food production is bound to suffer and the much trumpeted food security scheme may fall by the wayside if adequate production is not sustained to meet the colossal demand created by the "Right to Food" conferred on the citizen by the very same government. If only rich and super rich people are going to be the only beneficiary, widening the rich-poor gap, what meaning does the word "growth" has in the Indian context? Unless there is a policy shift from foreign dependence to self reliance as is being propounded by some experts, India is going to be trapped in a quick sand situation with no hope of redemption for its millions!         


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