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Economy Eclipse

Economy Eclipse

India was ranked 58th in the annual Global Competitiveness Index compiled by Geneva-based World Economic Forum (WEF) last year. This year India has slipped 10 rungs to end up at the 68th rank on the WEF annual Global Competitiveness Index, due to a marked improvement in the economies of some other countries. 

Prime Minister Narendra Modi’s government has set a record target of raising 1.05 trillion rupees ($14.8 billion) in the current fiscal year from sale of State Firms. The government’s budget gap goal of 3.3% of GDP is at risk due to sluggish revenue collections on the back a growth slowdown, limiting the government’s ability to spend on infrastructure and welfare programs.

The government is keen to lure multinational companies in the domestic fuel retailing to boost competition and shake up a sector that has long been dominated by state-run firms. The plan is to sell most of its 53.3% stake in Bharat Petroleum Corporation Ltd. (BPCL) to a strategic partner. Industry experts expect global players will come to bid for the assets as it is among the best performing public sector companies in India. T he buyer will have to shell out at least Rs.60,000 crore to buy the stake. 

In September 2003, the Supreme Court had ruled that BPCL, as well as Hindustan Petroleum Corporation Ltd. (HPCL), can be privatised only after Parliament amends a law it had previously passed to nationalise the two firms. The ruling came after the Atal Bihari Vajpayee-led National Democratic Alliance planned to privatise the two oil marketing companies. Vajpayee’s government had wanted to sell 34.1% of its 51.1% stake in HPCL to a strategic partner, along with management control. Reliance Industries Ltd., BP Plc of the United Kingdom, Kuwait Petroleum, Petronas of Malaysia, the Shell-Saudi Aramco combine and Essar Oil had expressed their interest in acquiring that stake before the Supreme Court stalled the process.  

The Narendra Modi government had in 2016 quietly repealed the legislation that had nationalised BPCL, doing away with the need to seek the Parliament’s approval for selling off the oil refiner to private and foreign firms. The Repealing and Amending Act, 2016, had annulled "187 obsolete and redundant laws lying unnecessarily on the Statue-Book" including the Act of 1976 that had nationalised erstwhile Burmah Shell. What is next? In Modi’s sales list Air India, BSNL/MTNL, Indian Railways, Airports and Natural Resources are included. Soon the country also may be put for sale! No one knows!! It takes a lot of talent to become a country seller from a tea seller!!

In 2017, Modi promised to eradicate poverty by 2022, as part of his “New India” agenda. Modi said in a public meeting: "The Congress has all along been reaping political benefits by employing poverty as a major weapon. Poverty cannot be eradicated as long as the Congress exists." And he asked voters to throw away Congress, so poverty would be automatically eradicated. Interestingly the former finance minister and late Arun Jaitley also spoke on poverty eradication while addressing college students in Delhi during that period. “India may become the third-largest economy by 2030 and poverty will fall below 10 per cent by 2025,” said Jaitley.

The poverty line for the 2011 figure was Rs.816/capita/month (for rural) expenditure. Or a person earning above Rs.27 per day will be considered above the poverty line. But this logical and also sometimes data-based estimation of poverty eradication gets punctured by many shocking layers of situations that make one Indian poor or rich. During his election campaign, Modi should have asked some realistic questions: why some pockets in the country always remain poor? Or why irrespective of his political party in power, poverty is chronic in many places? With all probability, poverty might not be eradicated from India, not in 2022 certainly. The next generation of the current poor Indians has high probability of remaining poor as well.

How poverty needs to be understood in India? What economists and politicians define as poverty is basically income poverty. But most of India’s poor reside in ecologically rich areas and draw a significant portion of their earning from these resources. So, ecological degradation has an impact on level of income, thus, on poverty level. Second, as the former rural development secretary NC Saxena used to say, “Poverty in India behaves like the stock market. On some days thousands fall below the poverty line and some days thousands rise above the poverty line.” This is where the challenge is to retain people above poverty line. And what are the reasons for people to fall below poverty line: a shock of a disaster-like drought, flood, human-made calamities warranting heavy expenditure, lack of consistent economic opportunities and lack of access to resources like forests.

The former Prime Minister Manmohan Singh has slammed the BJP government on ‘human-made’ economic crisis. He has pointed to the distressing trends of declining manufacturing sector growth and a depressed domestic demand. According to him our economy has not recovered from the blunders of demonetisation and a hastily implemented GST. The nominal GDP growth, including inflation touched a 15-year low. “There is a gaping hole in the tax revenues. Tax buoyancy remains elusive as businessmen are hounded and tax terrorism continues unabated. These are not the foundations for economic recovery,” said Dr. Singh. He targeted the ruling government for the massive job-less growth in the formal and informal sectors, the stressed rural economy and the erosion of the central bank’s autonomy. (The Times of India, September 02, 2019).   

There is a growing fear in India that corruption is getting institutionalised. For example, the electoral bonds scheme has made political funding less transparent and more controversial. So far, around 90 percent of funds from such bonds have gone to BJP, the ruling party. From top to bottom, corruption is widespread and it is taken for granted. We need to be ashamed that India has been ranked low in the Corruption Index, meaning that we are counted one among the corrupt countries. Here below is an interesting WhatsApp message from Brian of New Zealand on corruption in India. (Note: New Zealand is one of the least corrupt nations in the world).  

 “Corruption in India is a cultural aspect. Indians seem to think nothing peculiar about corruption. It is prevalent everywhere. Indians tolerate corrupt individuals rather than correct them. To know why Indians are corrupt, we need to understand certain patterns and practices.

·     Religion is transactional. Indians give God cash or gold/diamond ornaments and anticipate an out-of-turn reward. In 2009 Karnataka Minister G. Janardhan Reddy gifted a crown of gold and diamonds worth 45 crore rupees to Tirupathi Temple. India’s temples collect so much that they do not know what to do with it. Billions are gathering dust in temple vaults. Indians believe that if God accepts money for his favours, then, there is nothing wrong in doing the same thing in their daily life. Indian culture accommodates such transaction. When Europeans came to India, they built schools and hospitals. Interestingly when Indians go to Europe and USA, they build temples.

·     Morally there is no stigma. An utterly corrupt politician can make a comeback, just unthinkable in the West. Indian moral ambiguity is visible in its history. The history tells about the capture of cities and kingdoms after the guards were paid off to open the gates and the Commanders paid off to surrender. Indians’ corrupt nature has meant limited warfare on the subcontinent. In India fighting was not needed. Bribing was enough to see off armies.

·     There was always a financial exchange to take Indian Forts. Golconda was captured in 1687 after the secret backdoor was left open. Mughals vanquished Marathas and Rajputs with nothing but bribes. The Raja of Srinagar gave up Dara Shikoh’s son Sulaiman to Aurangazeb after receiving a bribe. There are many cases where Indians participated on a large scale in treason due to bribery.

·     Indians do not believe in the theory that they all can rise if each of them behaves morally. There are too many divisions among them. They forget that 1400 years ago they all belonged to one faith. The divisions evolved an unhealthy culture. The inequalities have resulted in a corrupt society.”          

The latest hot news is Rafale. The first deal to buy 126 Rafale fighter jet from France’s Dassault Aviation was negotiated in 2012, but never finalised. In 2016, the decisive Modi signed a smaller deal, this time with the French government, for 36 aircraft in “flyaway condition”, to be delivered between 2019 and 2022. According to the Finance Minister, the cost of each Rafale is Rs. 67 million. Whiffs of corruption swirled, fanned by Rahul Gandhi. Cabinet, it seemed, had been bypassed by Modi. An offset deal with Hindustan Aeronautics was scrapped in favour of an Anil Ambani-owned subsidiary. A classic example for corruption!  

In 2017 Modi made fun of certain Chief Ministers/Politicians who followed certain superstitious beliefs of hanging lemon and green chilly in their cars to ward off evil. He strongly criticised such practice as we are living in the era of science and technology. Surprisingly and shockingly, his own government’s Defence Minister Rajnath Singh did the same – i.e. using lemon, coconut, flower, red and yellow sacred threads – while performing Shastra Puja (Weapon Worship Ritual) to welcome the Rafale into the Indian Air Force. What a contradiction!! When the farmers from Tamil Nadu held various types of protests, including semi-naked and naked dharna, in Delhi for many days, Modi never bothered about them. But during the visit of the Chinese President, Modi wore the traditional dress of Tamil Nadu. This was done for what and to please whom? He also picked up garbage during his morning walk on the seashore. But... the Ganges at Varanasi (his Constituency) is still filled with filth and garbage.

Modi seems to be living in a “fool’s paradise”. He thinks that India has become a super power after “Howdy-Modi” program in US and the Chinese President’s recent visit to Tamil Nadu. Modi must come out of the fool’s paradise to see the eclipse of the Indian economy and initiate necessary measures for the steady growth of economy. O Lord, lead us from darkness to light!

(Published on 28th October 2019, Volume XXXI, Issue 44)