Economic Highlights
New Delhi, 28
March 2014
Cong Promises Galloping Inflation
MORE RHETORIC, MAXIMUM SUFFERING
By Shivaji
Sarkar
The Congress manifesto
may hit the common man hard. It is not only soft on inflation but has proposed
measures that would make everything from electricity to education dearer. Its promise of flexible labour laws and
unleashing corporates in rural areas to create a virtual zamindari --- SEZ in a
new garb --- is likely to cause untold miseries. It seems the poor have taken a
back seat in the Congress agenda.
Importantly, controlling
corruption is not a priority. While releasing the manifesto asserted out-going
Prime Minister Manmohan Singh, “Corruption in a developing economy cannot be
wished away”.
Not surprisingly, the
business community is not enthused. A FICCI on business confidence released a
day after the manifesto indicated that businessmen are disturbed with the
current economic trend --- dwindling profits, fall in jobs and demand,
difficulty in credit availability, high interest rates and high cost of doing
business.
In a guarded reaction to
the manifesto, FICCI stated, “Wide variety of rights must be based on sound
economic health of the country”. Significantly, no corporate is supporting
caste-based reservation in private jobs including CII President Kris
Gopalakrishnan, Maruti Suzuki Chairman RC Bhargava and Videocon Chief Venugopal
Dhoot.
Indeed, if the Congress
comes back to power, people should expect galloping inflation as nothing would
be available without “user charges” for “assured quality” be it electricity, natural
gas, LPG education, train
services or any other service. So
train fares would compete with air fares which would become a reality for even
those who cannot afford unreserved seats.
Moreover, it offers “complementarity”
between business beneficiaries of welfare schemes by arguing that programmes
like housing and health security would spur demand. In a radical
shift, the manifesto promises “only the absolutely necessary subsidies to the
absolutely deserving.”
This only
means the Party wants to ensure that people are deprived of the bare
necessities for the sake of “quality”, a right that every consumer or user has.
Undoubtedly, the benefit would go to large companies, who now would have an
alibi to harass consumers by offering poor services for fixed or lower tariff. The
national highways are stark realities of this.
This is
not all. Each so-called “better” service would have higher premium. The suffering
poor citizens would have only one goal ---- to fill up pockets of perpetrators
of officially-sanctioned loot --- a sure path to mis-governance. This possibly
justifies the recent doubling of RIL’s gas price from the Krishna Godavari
basin from $ 4.2 to $ 8.3 per mbtu.
The
manifesto proposes upgrading the Sarva
Shikhsha Abhiyan to Shreshta Shiksha
Abhiyan. The underlying assumption appears to be that having expanded the
coverage of public services in the past 10 years, the Congress now wants to
focus on their quality, for which it is not averse to charging users.
Consequently,
the aam aadmi would have to toil
harder to get “proper” and certainly not “better” education in a country where
jobs have become scarce and wages minimal, except for pampered Government
employees. The age-old concept of vidyadan --- bestowing education to
all --- is being sacrificed at the altar of higher profits. Remember, affordable
education has made India
one of the global repositories of human resources across the world.
No
wonder the number of students in
debt has doubled in the last five years of UPA II according to data compiled by
the Indian Banks' Association. The outstanding amount is Rs 8,297 crores and
the number of defaulters is rising because degree-holders are not getting jobs.
Additionally, the
manifesto virtually calls for withdrawal of the Central Government from all
activities that would benefit the people. The responsibilities are proposed to
be transferred to the State Governments. Thus, the importance of the
big-budget “national flagship programmes” of UPA I and II has been reduced.
The
Congress says it wants to pass on a greater share of the cost of implementing
these programmes to the State Governments as they have the fiscal space to bear
the expenditure. This, the manifesto says, will let the Union Government
allocate more resources for its exclusive responsibilities such as defence and
railways. Undeniably, this is a virtual admission of the poor economic health
and revenue constraints the Government is suffering from.
Questionably,
is the manifesto a mere rhetoric?
The working class is
likely to be worst hit as the manifesto wants to give freedom to employers to
fix wages and policy of hire and fire. The 15-point
agenda for socio-economic and political transformation include initiatives like
promoting flexible labour laws.
This is in
sharp contrast to the promise of creating “10 crore jobs by unleashing $ 1
trillion corporate investment in the rural area”. It appears as if the rural
people have no entrepreneurship and they could be subjected to become slaves of
big corporate houses, who, as per the Congress vision, would own the vast
hinterland --- a massive zamindari!
The Party also promises
right to health, pension, housing and social security and wants the fiscal
deficit contained. But, it is silent on funding the right-based programmes. Further,
health care is likely to be tagged at higher charges, housing would have a higher
cost and social security would come for a price.
For
business and industry, the Congress agenda promises to address the ‘holy cows’
of “flexibilities” in the labour market and minimum tariff “protection” to
domestic manufacturers against imports. It assures of special tax incentives to
firms manufacturing IT hardware to take on the imported “popular branded
hardware” such as Apple and Samsung. To exporters, it promises waivers or
rebates on all Central and State taxes on exported products.
However,
it is silent on outsourcing of manufacturing to China
and South Korea.
The manifesto dwells on trite cliché of a manufacturing policy announced two
years ago to revive the industry. It has silent on reviving small
entrepreneurships whereby the pledge of “Ease of Doing Business” is apparently
restricted to large businesses and foreign firms, for whom a number of
facilities are proposed.
Notably,
the Party’s tall claim of 14 crore people crossing the poverty line has been
questioned by Moody, Goldman Sach and other international rating agencies. The
agencies argue that the cut-off line was put almost at half, in other words, Rs
750 per month income while this should be double as per inflation figures. That
means 14 crore more have gone below the poverty line.
Pertinently,
it is silent on giving tax reliefs to the highly taxed citizens.
Therefore,
in keeping with Congress Vice-President Rahul Gandhi’s vision, Indians would
have to be prepared for more rhetoric and maximum suffering! ----- INFA
(Copyright, India
News and Feature Alliance)
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