July 12, 2009 2:05:19 am
Last weeks Budget brought home to me a sad reality. It was not the Marxist parties who prevented economic reforms from going forward during Dr Manmohan Singhs last government,it was the Congress Party. This is not just disappointing but scary because now it is certain that India will remain a wretchedly poor,hopelessly backward country well into the middle of this century. We have to alter course if this is not to be the case and the Finance Minister made it clear that not only does he have no intention of altering course but as an admirer of Indira Gandhis visionary economic policies,he plans to emulate them.
So instead of policies that will create wealth we will return to spending huge amounts of our scarce resources on keeping the poor in poverty. It is my view that the National Rural Employment Guarantee Act (NREGA) will serve mostly to keep millions of very poor Indians in perpetual poverty because a hundred days of employment a year can do no more than that. It is my view that the Congress Party did not win 200 seats in the last election because of guaranteeing rural employment but because the average voter was scared of seeing some Mayawati type politician as Prime Minister. Or some aged Hindutva warrior. By comparison,Dr Manmohan Singh and the possibility of Rahul Gandhi as his heir seemed like a better choice. But,halfway through the first hundred days of this government and it is beginning to seem like a return to our bad old socialist days.
Why do I make so harsh a judgment? Because no country in history got rich without investing in the tools of prosperity. These are modern roads,modern systems of transport,modern systems of mass education and healthcare and a decent standard of living in towns and villages. This requires massive investment. Just for infrastructure we need to double what we are spending and one way for this to happen could have been to link employment under the NREGA to infrastructure. Why should rural people not be given real jobs in constructing highways,ports and airports? Why should they not help build the cold storages that could help transform agriculture? Indian farmers lose half the vegetables and fruit they produce because of our primitive food processing industry. For these changes to happen we need to reform not just our economic policies but also our mindset.
We need a government that acknowledges that we are going nowhere until we can reform the Indian state and make it more just and more able to serve the needs of the ordinary citizen. The poor old aam aadmi in whose name this government claims to function. But cannot as long as the state is comprised of a corrupt,venal bureaucracy who knows only to serve its own interests. Why should officials whose children study in expensive foreign universities be interested in reforming education for the natives? Why should they be bothered about building houses and sanitary living conditions for the ordinary Indian when they dwell in vast bungalows in the sanitised splendour of Lutyens Delhi? When was the last time you heard a Finance Minister mention the need for government to cut spending on itself?
Instead of ridding us of the fringe benefit tax,the Finance Minister would have done better to rid us of the fringe benefits that our officials enjoy. Think how much could be saved if we could stop just that one little perk: government accommodation for MPs. Why should they not all be accommodated in one of the governments defunct ITDC hotels in Delhi instead of in flats and houses that could earn a small fortune if rented out? It is my view that the money earned from just this one small change would be sufficient to ensure affordable housing for every last aam aadmi.
For these things to happen, we must change our old socialist ways. We need to admit that the economic policies we followed till Dr Manmohan Singh started the process of economic reform were policies that impoverished India. The Prime Minister knows this and has often acknowledged it. He knows that if India is to become the economic powerhouse we long to be,we need more reform,not less. He knows that the Indian state is sitting on vast tracts of real estate and other assets that could be put to better use. He knows that real employmentwhether rural or urbanwill only be really guaranteed when it becomes easier to hire and fire workers. He knows that there is a long list of dead assets in the public sector that must be sold because they are a burden on taxpayers. What is puzzling is why despite knowing all these things he allows his Finance Minister to take us backwards instead of forward.
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