A LOOK AT ECONOMY AND REFORMS
On this independence day, let me take a look at what is happening in the country. The intelligentsia is divided along political fault line into two camps; one the perceived right wing and HIndu supporters and the other the perceived left of center and secular. The secular brigade is going around crying hoarse that the right wing fringe elements are a danger to the society and it gets a tacit support from the ruling party. For every ill that is befalling the country, the secular brigade has made it a point to blame the ruling party in general and the prime minister in particular. The recent nose diving of the rupee against USD has also been blamed squarely on the policies of the government and inept handling of the currency and economy by the PM. It is apparent that they seem to forget the Indian currency is no longer insulated from the global tremors in the financial and currency markets. With the Turkish Currency falling by almost 70% in a few weeks and the Turkish economy on the boil, it is sure shot that the tremors will affect all the currencies howsoever they are insulated from such acts; and that is precisely what had happened in the last few days when the Indian Rupee breached the 70 mark against USD in history. But the secular arm-chair economists will not accept such credible explanations but blame the government and the prime minister.
From the first prime minister till about the beginning of 1990s, the successive governments had taken decisions on socialistic approach and on populist measures. The shock of having a very poor foreign exchange reserve position which did not even cater to the import of oil for two weeks in 1991, the government of the day was forced and arm twisted to take some serious economic decisions which were far from populist. The part floating of the currency and allowing the market to determine the exchange rate of the currency vis-a-vis other currencies, relaxing of the norms for imports/ exports, tax reforms, banking reforms etc. were partly attended to in the first few years of the new government headed by the then prime minister P V N Rao. With the active political support from the prime minister and totally shackle free, the then finance minister M M Singh was able to implement some far reaching reforms in some of the key areas.
But the scenario was not that rosy in the years preceding that decade. Successive governments adopted a cautious approach and took many decisions based mostly on populist measures. The slogan, "Garibi Hatao", of the then prime minister was more a Jumla to describe in terms of what the present day opposition calls the announcements of the present government. Neither the poverty was removed nor the people below the poverty line were uplifted.
The first prime minister had a total apathy towards the private sector and was instrumental in setting up many industries in the state sector. Even the highly successful and profitable airline of the day was nationalised. The first Indian governor general of the country was in favour of a private sector free of shackles and he was against the licence, permit, quota system which were hampering the growth of the country. The economic growth of the country was derogatorily dubbed as Hindu rate of growth - meaning that it never exceeded 3% annually. The subsequent government under the prime minister Indira Gandhi nationalised the Banking in the country bringing into the state fold almost 85% of the banking into the state sector.
There was a tremendous growth in the telecom sector in the mid 1980s to late 1990s. This despite the huge behemoth of the telephone industry and service provider in the state sector. This was possible mainly on account of allowing the private sector players to operate both in manufacturing the hardware and provide services required for the telephony. The reduction of call charges and the revenue sharing model adopted by the NDA government under A B Vajpayee made the telecom industry a power to reckon with. Today the country ranks among the first few in terms of geographical reach and number of subscribers in terms of mobile telephony. Likewise the computer industry, both hardware and software for many applications, continues to be in the private sector with adequate statutory safe guards. This has paved the way for the Indian computer companies to compete with international giants in providing service support to many applications developed by these companies. The banking business was brought under computerisation initially as a half hearted measure with the communist backed trade unions objecting to call the machines as computers. In the subsequent decades the banking industry had undergone a sea-change with core banking brought in almost all the banks and making the banking anywhere any time banking a true axiom.
The fruits of these measures adopted by the governments of P V N Rao and A B Vajpayee took a few years after they demited officer to be realised by the successive governments/ people. The golden quadrilateral connectivity of the four corners of the country by international standard roads to Prime Minister's Gram Sadak Yojana started by A B Vajpayee were appropriated by the succeeding UPA government. However, the road building took a backseat in the next ten years with many part of the quadrilateral remaining unfinished and some of the north east areas remain aloof from the national mainstream. It got the fillip after the new government was sworn in 2014 and many works that remained unfinished got completed and new projects were taken up on priority basis to give the much needed connectivity to many parts of the country. The airline business that was the monopoly of the government was relaxed in the early to mid 1990s and private participation made the airline sector of the economy started looking up. The budget airlines or no frill airlines made the airline travel affordable to the common man with their pricing of the travel. The IT sector opening up and the low pricing of the airline travel gave an opportunity to many, who had looked up the sky only to see the plane in the sky, to travel both within and without the country.
The debate as to what was the actual GDP during the UPA governance of the country during 2004 to 2014 or whether the current GDP is comparable etc. is a never ending one. There are many people who vote that the economy was getting a fillip during the decade from 2004 and many others who denounce the same period as a dark hour in the economy of the country with many scams of enormous proportions. Howsoever, it cannot be denied that the economic reforms whether forced down the throat of the country in 1991 or taken willingly voluntarily, started bearing fruits in the succeeding decades. It is a continuous process and to be adjusted to the narrative as obtaining from time to time. It cannot be like that the reforms have been done and now the economy has to look up without any further tinkering is a fool's assessment of reforms. The introduction of GST and the demonetization effort of the present government will take at least a period of next five years to provide a credible data to prove whether the economy gained and to what extent. Whatever data that is being dished out now will be half baked like that of the GDP figures that were being discussed in the period 2004-14. Even the finance minister of those period is now trumpeting that the GDP figures of that period (which stand revised now close to 10% or slightly above) were better than those of the present day. Both the statistician and the politician seem to forget that the base figure increases over a period of time due to continuous growth in the country.
The present government had taken some serious efforts using the banks in the state sector, mobile telephony, the unique identification number (Aadhar), and the core banking in the banking sector to effectively transfer money to the beneficiaries without the involvement of middlemen. This has saved the government crores of money that was being siphoned off from the system.
What is needed to the country is a corruption free government, a basic standard of living for all the people irrespective caste creed or religion. It appears that the attempt of the government, be it the present one or the previous ones, is getting derailed by the actions of various political parties to gain brownie points. There seems to be no consensus among the various political parties when it comes to nation building and each is fighting for its own pound of flesh. The lavish life style and the increase in wealth of the political leaders and the amount of money spent on their family functions and elections are pointers to this.
But the scenario was not that rosy in the years preceding that decade. Successive governments adopted a cautious approach and took many decisions based mostly on populist measures. The slogan, "Garibi Hatao", of the then prime minister was more a Jumla to describe in terms of what the present day opposition calls the announcements of the present government. Neither the poverty was removed nor the people below the poverty line were uplifted.
The first prime minister had a total apathy towards the private sector and was instrumental in setting up many industries in the state sector. Even the highly successful and profitable airline of the day was nationalised. The first Indian governor general of the country was in favour of a private sector free of shackles and he was against the licence, permit, quota system which were hampering the growth of the country. The economic growth of the country was derogatorily dubbed as Hindu rate of growth - meaning that it never exceeded 3% annually. The subsequent government under the prime minister Indira Gandhi nationalised the Banking in the country bringing into the state fold almost 85% of the banking into the state sector.
There was a tremendous growth in the telecom sector in the mid 1980s to late 1990s. This despite the huge behemoth of the telephone industry and service provider in the state sector. This was possible mainly on account of allowing the private sector players to operate both in manufacturing the hardware and provide services required for the telephony. The reduction of call charges and the revenue sharing model adopted by the NDA government under A B Vajpayee made the telecom industry a power to reckon with. Today the country ranks among the first few in terms of geographical reach and number of subscribers in terms of mobile telephony. Likewise the computer industry, both hardware and software for many applications, continues to be in the private sector with adequate statutory safe guards. This has paved the way for the Indian computer companies to compete with international giants in providing service support to many applications developed by these companies. The banking business was brought under computerisation initially as a half hearted measure with the communist backed trade unions objecting to call the machines as computers. In the subsequent decades the banking industry had undergone a sea-change with core banking brought in almost all the banks and making the banking anywhere any time banking a true axiom.
The fruits of these measures adopted by the governments of P V N Rao and A B Vajpayee took a few years after they demited officer to be realised by the successive governments/ people. The golden quadrilateral connectivity of the four corners of the country by international standard roads to Prime Minister's Gram Sadak Yojana started by A B Vajpayee were appropriated by the succeeding UPA government. However, the road building took a backseat in the next ten years with many part of the quadrilateral remaining unfinished and some of the north east areas remain aloof from the national mainstream. It got the fillip after the new government was sworn in 2014 and many works that remained unfinished got completed and new projects were taken up on priority basis to give the much needed connectivity to many parts of the country. The airline business that was the monopoly of the government was relaxed in the early to mid 1990s and private participation made the airline sector of the economy started looking up. The budget airlines or no frill airlines made the airline travel affordable to the common man with their pricing of the travel. The IT sector opening up and the low pricing of the airline travel gave an opportunity to many, who had looked up the sky only to see the plane in the sky, to travel both within and without the country.
The debate as to what was the actual GDP during the UPA governance of the country during 2004 to 2014 or whether the current GDP is comparable etc. is a never ending one. There are many people who vote that the economy was getting a fillip during the decade from 2004 and many others who denounce the same period as a dark hour in the economy of the country with many scams of enormous proportions. Howsoever, it cannot be denied that the economic reforms whether forced down the throat of the country in 1991 or taken willingly voluntarily, started bearing fruits in the succeeding decades. It is a continuous process and to be adjusted to the narrative as obtaining from time to time. It cannot be like that the reforms have been done and now the economy has to look up without any further tinkering is a fool's assessment of reforms. The introduction of GST and the demonetization effort of the present government will take at least a period of next five years to provide a credible data to prove whether the economy gained and to what extent. Whatever data that is being dished out now will be half baked like that of the GDP figures that were being discussed in the period 2004-14. Even the finance minister of those period is now trumpeting that the GDP figures of that period (which stand revised now close to 10% or slightly above) were better than those of the present day. Both the statistician and the politician seem to forget that the base figure increases over a period of time due to continuous growth in the country.
The present government had taken some serious efforts using the banks in the state sector, mobile telephony, the unique identification number (Aadhar), and the core banking in the banking sector to effectively transfer money to the beneficiaries without the involvement of middlemen. This has saved the government crores of money that was being siphoned off from the system.
What is needed to the country is a corruption free government, a basic standard of living for all the people irrespective caste creed or religion. It appears that the attempt of the government, be it the present one or the previous ones, is getting derailed by the actions of various political parties to gain brownie points. There seems to be no consensus among the various political parties when it comes to nation building and each is fighting for its own pound of flesh. The lavish life style and the increase in wealth of the political leaders and the amount of money spent on their family functions and elections are pointers to this.
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