Without fresh investment in private sector 7% growth difficult.
By all accounts, the economic situation is going to get far worse in the coming weeks and months than it is now. Not only are the share markets tanking, the overall economy may be in the grip of a severe slowdown. Despite the obligatory projection of a healthy seven-plus per cent growth, and booming revenue collections thereof, it does look that we may be headed for tepid growth due to skewed domestic policies and a worsening external environment.
There seems to be no appreciation of the adverse signals emanating from the key sectors of the economy for undertaking timely remedial action. The government is immersed almost full-time in fixing plumbing of the old and rickety system for it to spare time and energy to tailor-make policies for reversing the downward trend. Obsessing with plugging leaks of public money seems to have so absorbed the highest in the land that there is a woeful absence of a big idea, an ambitious vision, a courageous boost to the corporate sector. Indeed, a complete lack of any measure which might help improve economic sentiment. Nobody, it seems, is dong serious economic thinking either in the ruling party or government. Leaving it to bureaucrats is a prescription for lacklustre policies since by training and inclination they are afraid of path-breaking initiatives.
Meanwhile, glut of bad news piles up, confronting policymakers in the eye. Markets have shed nearly 20% from their record highs. Foreign investors, spooked by the irrational hike in corporate taxes, have pulled out over Rs 12,000 crore from the share markets in July alone. Rupee is again under stress. Exports are languishing. Key sectors such as the labour-intensive real estate, auto, are in doldrums. Telecom sector, key to Narendra Modi’s ongoing digitisation project, is under a pincer attack from a predatory private operator and a greedy telecom ministry fully unmindful of the health of the established players.
Instead of providing the much-needed boost, the budget proved a huge dampener. Why on earth anyone in the first of a five-year term produce such a namby-pamby budget which leaves the entire corporate sector, the veritable engine of growth, mulling over its wounds, is baffling. Someone did not think through the implications of retrogressive taxation, which is a throwback to the permit-quota-licence years when artificial fetters were clamped on production and distribution, while only generators of black money managed to thrive in open collusion with the purveyors of samajwad.
Socialism in all its versions having been buried a million fathoms deep everywhere, here in India under Modi it still seems to cast a spell on those who until very recently were widely believed to be the proponents of an open and free economy. The NDA II and III, as against NDA I, has not only clung to but further expanded UPA’s entitlement net to cover more and more people under more and more freebies. Nobody would grudge this generosity were it not for the fact that the resulting stress on public finances and the concomitant failure to spur growth can push the economy into a deadly downward spiral.
In this context, the CAG finding that the actual fiscal deficit in 2017-18 might have been closer to 6% rather than 3.4% as projected seems to have escaped the attention of media pundits. The sleight of hand in the budget, the CAG implies, was made possible by the huge borrowings by the public sector undertakings. Notice that disinvestment in public undertakings through forced purchase by other government-controlled entities is actually a mere paper-transfer, and not a genuine disinvestment. Such-like fixes allow finance ministers to claim lower fiscal deficit, though in real terms it is far from true.
Without doubt, Prime Minister’s own innate distrust of the corporate sector may explain the failure to frame policies which can provide a much-needed fillip to fresh investment in industry and business and improve overall investor sentiment. Government spending on infrastructure has its limits. Without fresh investment by private sector, growth will continue to splutter. To be corporate-friendly is no longer an electoral liability, not in the post-liberalisation period anyway. No government can provide jobs to everyone. Nor does it have surplus cash for setting up new industries. Private sector does it well, but needs to be watched over by the hawk-eyed official regulators. Because socialism birthed a whole breed of crony capitalists who exploited government hand-outs to line their own pockets with filthy lucre, we cannot abandon the entire corporate sector as an outcast and let it languish in slow growth and shrinking profits.
A benign regime would extend a hand of cooperation to the corporate sector to ensure its well-being so that it contributes to the national kitty substantial sums for the government to be able to pay for the ever-rising bill for entitlement schemes. The voodoo economists of the Swadeshi Jagran Manch can be heard but ignored. So also one can forget the cheap jibe of a suit-boot ki sarkar. Nothing should deter Modi from doing the right thing by the economy by his doing the right thing to spur fresh growth and investment. Harnessing the untapped energies of the corporate sector for overall economic growth should be a serious policy objective. Otherwise, there shall be no stopping a return to 5% growth and a sickly industrial sector.
A permanent salary-man
Manmohan Singh’s Rajya Sabha term ended a few weeks ago. He could not be re-elected from Assam because the Congress lacks the numbers in the Assembly. The DMK was asked to spare one of the four seats that fell vacant. It refused. The former PM brings no electoral or political value to the party. Fortunately for Singh, a vacancy arose in Rajasthan following the untimely death of a BJP member. Now Singh is all set to return to the RS. He has already spent 28 years in the Upper House, his solitary attempt to become a Lok Sabha member having been roundly rebuffed by the voters in South Delhi.
Indeed, do consider that Singh is probably the only politician who has not been without a job ever since he started working way back in 1957 as a lecturer in economics in the Punjab University. Not a day without one post or the other. Even veteran leaders have had to stay out of Parliament some time or the other in their long careers and therefore without official bungalow and other perks that come with being an MP. But not our doubly-blessed Manmohan Singh. He has had a job without a break for 62 years, a record probably matched only by A.M. Naik of Larsen & Toubro who too refuses to call it a day despite his unusually long innings at the infrastructure major.
As an MP his contribution remains hidden from the people for he neither intervenes in the debates even on crucial economic matters nor does he contribute in the deliberations of the Finance Committee of Parliament of which he has been a member for several years. Probably why the Gandhis prefer him is that he can be always relied upon to be wheeled out at critical moments to lend “moral” support to them through an occasional statement. For the most part, Singh prefers to be a Mauni Baba.
WINS OR GIVEN?
The headline said: Ravish Kumar wins 2019 Ramon Magsaysay Award. Would have been more appropriate if it had read: Ravish Kumar given 2019 Ramon Magsaysay Award.