In the UPA’s scheme of things, politics appears to have taken precedence over economics, The big underlying positive message for this year’s is that high growth is here to stay, though global factors might periodically dampen it. Accompanying this prognosis is one that is as unpalatable as it is bold – inflation too is here to stay.
In the next financial year, the economy could expand 9-9.25%, while higher savings and investment, coupled with India’s demographic dividend, could propel it to an ever higher trajectory in the years to come. But it sounds a note of caution on infrastructure and the fiscal deficit. Higher growth would push up inflation by 1.5 percentage points, and capital flows from overseas are also adding to domestic inflationary pressures. The solution is familiar: strengthen food security, provide subsidized fertilizers, and ensure financial inclusion.
The other part of the prescription might not be politically easy for a government reeling under an Opposition attack on price rise as well as corruption. In fact, it even talks of not cracking down on all forms of hoarding and compares it with cholesterol which can be good and bad.
Some of the suggestions evoke a strong sense of deja vu: for instance, boosting farm productivity through a second green revolution and stepping up investment in the sector which accounts for nearly one-fifth of the economy and sup- ports over half the population.
Another suggestion that is a blast from the past is on plugging leakages in government schemes, especially the public distribution system. The recent survey cites studies to show that leakages in the PDS are anywhere between 40% and 55%. The way out is also something that has been talked about for at least half a decade: direct cash transfers. The UID could help the cause and a beginning could be made with kerosene.
One clear break from the past is arguably also a telling indicator of the mood of the times – there is a moral science lecture of sorts against the backdrop of a string of scandals that, corporate chiefs say, is also affecting policy-making. The document talks about the need to foster the culture of honesty and trustworthiness for rapid and robust growth.
The Union budget 2011 however failed to tackle the two most urgent issues namely inflation and corruption effecting millions of Indians at the lowest level, but I assume that this is the cost that we will be paying to sustain high growth rate momentum. Furthermore, Supreme Court ordered removal of CVC PJ Thomas has put government on mat, and has dented the brand Manmohan tremendously.
– Prashant Tewari, Editor-in-Chief