Tuesday, 19 February 2013
The Big Bear and two Economists
The envy that the world nations feel at India is not insignificant – when a plague is ravaging the land people will chase even quacks. Then what if you have a plague specialist at home in such a situation? Indians are in that enviably fortunate position. Countries are crashing down like a pack of cards in the shock of the recession. No one knows a remedy. Both the outgoing Bush and the incoming Obama think depression is a mental disorder. Somebody has defined recession as your neighbour losing his job and depression as you yourself getting the sack. India has no such problems. Economist Manmohan Singh will diagnose the illness correctly and prescribe the drugs.
Till the time of Narasimha Rao there wasn't much demand for economists in the country. A Reserve Bank Governor is needed to sign the rupee notes. Those days one rupee notes were galore. There wasn't much else an economist could do. A government secretary used to sign the notes. The main work of the governors was to tender the note printing job to overcome the budget deficit. The job of making a mess out of the economy was left to the Prime Minister and the Finance Minister.
A type of high end socialism was the order of that day. If somebody tried to produce anything or tried to set up a factory to give employment to some people everybody joined hands to proclaim him a public enemy. By the time you got the licence and permit to set up the plant only the grand children of the applicant will be alive. Only after Soviet Union, the country that was practicing a better version of socialism, kicked the bucket did the accountants here started going through the books. As Narasimha Rao had high opinion about his own economic knowledge he made Manmohan the Finance Minister.
Manmohan was acting as the chief lieutenant of those who were implementing socialism for the previous twenty years. Solving the problem yourself isn't as easy as advising and misleading others as how to solve the problem. Manmohan was made the Finance Minister when there wasn't even one billion dollars in the kitty. The only confusion was about the number of deficits in different sectors of economy in which we had broken world records. Anyway, it is enough to say that in five years, the country somehow managed to get over issues like growth rate, per capita, GDP, FDI, CPI and RSP. Though hunger increased proportionately, Manmohanji's help was not needed to flunk the elections – Narasimha himself had created enough reasons by then.
Manmohan has not much role in running the economy during the four and a half years when he's the Prime Minister. That he was not in charge of the finance ministry was not the only relief. As they were ruling with the support of the Left, the responsibility of everything they could not do could be heaped on the Left. There are people who ask why the government does not do anything after the departure of the Left. Sorry, it wasn't possible. It is as if you escaped the devil to fall in the deep sea. Immediately after the Left left, economic crisis fell like a thunder bolt.
It isn't wise to mouth the old reasons during the period of recession. In the old days Manmohanji used to repeat that the moment we merge with global economy all our problems would disappear. How can you say the same thing when the whole globe is bursting like a bubble? That is the reason why he declared recently that keeping our economy as far away as possible from global economic trends is the new policy. People would even willingly accept a declaration that we are going back to Nehruvian socialism – the Sensex of socialism has soared up so much.
It is reported that in the US people are rushing from bookstall to bookstall to get copies of Das Capital and Communist Manifesto. Those books are out of print. Somebody has approached Vladimir Putin to see if any old copies are still lying around in bookstalls in Russia. During the Presidential elections the opponents had tried a smear campaign against Obama that he was a socialist. The charge was that he had used the expression 'equitable distribution of wealth' in one of his campaign speeches. The US voters would even tolerate a sexually promiscuous candidate, but not a socialist. If it was a year ago, this would have been enough to put Obama out of the picture. But he didn't lose.
Now Mnmohanji's government is in a dilemma as whether to turn left or right. The people haven't got out of the shock that government has appointed another economist to advise it on economic policy. They have appointed Raghuram Rajan, the guy who advised everybody a few months ago to convert all Indian banks to American style (as nobody followed his advice no Indian banks crashed), is here to advice Manmohan. A guy who advises Manmohan in economics should be some real big shot!
Two economists – one advising the other and the other following the advice – are going to tackle the big bear of recession in the coming months. Definitely something will happen in the next six months.Saving Capitalism from the Capitalists is the title of the best seller Raghuram Rajan wrote. Saving Economics from the Economists could be his next book.
One thing the Election Commission should immediately do is to take away the ceiling set on candidates' election campaign expenses. Hon. Commissioner shouldn't put forth lame excuses like he doesn't have the power to do so etc. The old Commissioner T N Seshan saar acted as if the Commission had all powers other than declaring a lost candidate elected. If they can't take away the regulation completely, they should at least suspend it till the global recession is over.
There is only one remedy for recession – people should throw away money as if it is waste paper. When money flows demand for products will increase. When the demand rises, production will rise, profit will rise and employment opportunities will increase. When this order is set in motion the big bear of recession will have to run for its life.
The government is pumping in Rs 250 billion in the infrastructure sector as a measure to confront recession. Is this to improve the infrastructure? No and never! It is to take money to the people. Poor central government could do only that much.
There are other groups of people who can do this better – the political parties and the leaders. They have enough and more money with them. If you can believe the Congress leader Yogendra Makwana, the Alwar legislative constituency seat was sold to one Tikkaram Jooli for two and half crores rupees. Poor Tikkaram is a scheduled caste man, may be that's the reason why the amount was so small. As a rule an assembly constituency seat is worth a minimum of Rs 50 millions!
Because of the expense ceiling and other regulations, poor candidates can't spend enough money. Central election observers are wandering around like detective hounds. Till the end of polling they are the kings – there are no ceiling to their expenditure. As the money is government's they can act like spendthrifts. They are doing it to see the way the candidates spend money ! Candidates are not spending money they received from the Election Commission or the tax money government gave. Nobody understands why the Commission is so worried…
Business experts tell us that when a man start constructing a house he would buy about four hundred products from the market. That is why the government gives incentives like tax concessions to promote house building activities. Whereas on the election campaign sector thousands of products are bought and sold…these days mikes and speeches are not the only campaign media. So many products like computers, internet, printing ink, paper, petrol, vehicles, bottles, sodas, guns, knives and forks are essential commodities in the election market. Really they should permit each candidate to spend as much as possible. If they can spend Rs 25 millions for a ticket how many more millions will they not spend to win. Bribing the voters too should be made legal. Voters should be permitted to accept money from as many candidates as possible. They can conveniently forget all those names while casting votes.
Candidates and parties should also stop the practice of giving money and material to voters alone. Media too can be given money at advertisement rates for carrying photos and speeches. Let the wretched media syndicate too get over their damned economic crisis.