Delhi: India has come a long way from that day in 1947 when it gained independence and the rupee was a currency at par with the US dollar. The current free fall of the rupee is the end result of an economy gone into serious slow down, and now heading for a full stop. Any amount of public speeches, any amount of copy book interventions by the Reserve Bank of India have failed to stall this free fall. The basic cause is Indias ailing economy. When the UPA first came to power, the countrys economy was looking up. The world took note of an emerging India. There was optimism around about India and her place in the world. In its endeavour towards a fair distribution of the wealth then being generated by a resurgent economy, the government launched schemes like MNREGA that gives doles to the poor. With hardly any surplus funds, how do you finance such massive rupee guzzling schemes? Simple, by printing currency notes even if it is bad economics and bad for the economy. As though printing of currency notes to meet the budget deficits was not enough to play havoc with the economy, the UPAs failure to rein in the demon of corruption has not only blocked foreign investors out of India, but has also now broken the back of Indian industry as well. Indias labour force may be less productive and more expensive than Chinas, but that alone is NOT the reason for the high cost of Indian products. Indias businessmen have to build in a cost factor for corruption, and, that has crossed an acceptable level long back, thus making it impossible for India to compete in a globalised economy. Uncalled for bribes amounting to regular monthly payments to excise, labor and other sundry inspectors; payments to income tax officers; payments to service tax auditors; payments to politicians, and last but not the least, payments to bureaucrats, collectively make up something like a staggering 20 percent of the cost of any Indian product. In the midst of all this, the government has decided to shut its eyes, calling corruption a coalition dharma! Why is it that Indias infrastructure projects are stalled? Indecision by the government is said to be the main cause. Is that true? May be it is one factor. The real issue is the problem that a contractor faces in meeting the demand for bribes that pushes up the project cost by 50 percent, something that is difficult to absorb in the given profit margin. The net result is indecision to give out the job, for there is no guarantee for payback to the corrupt.
Posted on: Thu, 21 Nov 2013 17:32:29 +0000
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