Every Indian must think about this The total food subsidy would cost Rs90,000 crore to the government including Rs10,000 crore for the implementation of the food security bill." The food bill is major cause of tension for several traders. Moreover, Indian economy is passing through critical phase. It seems Indian economy is sinking. The Reserve Bank of India has already warned that public spending on the bill can be a turning point. It would deepen the crisis. The cost of the crude oil has already reached a high level while the country is already facing high inflation. Several international companies are selling their huge shares and leaving the country due to unfavorable economic and volatile global conditions. The stock index is low. India, in fact, is in a state of shock and panic. India seems to be failing in its efforts to attract foreign investors. The current account deficit is also one of the major causes for the sharp fall of Indian rupee. The government can stabilize the currency and attract funds into the country by dint of hard work. Nonetheless, it is an uphill task. The hit low value of rupee is a major source of tension among Indians. The falling rupee also reflects – In large or substantial measure – the world’s response to the present state of India. There are at least three issues that have caused dismay.The first is the repeated paralysis of Parliament. Day after day the image we show the world is of howling, screaming, quarrelling MPs who persist with partisan and, even, petty protests despite the daunting challenges facing the country. They seem unconcerned about the key reforms that will determine India’s economic future. They care more for their personal prospects in Andhra, Supreme Court judgments about their eligibility, missing files and fixing the PM’s accountability and, of course, ventilating easily manufactured anger against Pakistan. In contrast, Nero only fiddled! The second is what one call the Vodafone tax amendment. The government’s decision to overturn a Supreme Court judgment, upheld on review, sent a dismaying message to investors that India doesn’t have a well-defined and stable tax regime. Instead, it can be manipulated by government caprice. Even court verdicts can be cast aside. So beware before you invest in India – the government will change the rules of the game not just after play has started but even after the referee has blown the whistle and the match is over! Quite frankly, who wants to invest in such a country? The third, one admits, is controversial. It can be read in many ways. I am talking of the decision to push through the food security bill at a time when concern about India’s deficit has peaked and when everyone knows the finance minister’s commitment to 4.8% can only be honoured by savage and, possibly, damaging expenditure cuts. Pathetically about 269.3m people living below the poverty line, out of a total population of 1.2bn in India in 2012. The decline in the value of rupee has raised several million people above extreme poverty. It may also be interesting to know that those spending up to 27 rupees a day in rural areas and 33 rupees in urban areas are considered to be living in poverty in India. The cost of food, rent and essential commodities are going to be out of the reach of the masses. The average cost of one kg of rice sold through PDS at subsidized rates is currently around 18 rupees. The welfare policies of the government for the poor seem to be leading towards failure. According to the United Nations report about 500,000 Indians die every year simply because of lack of clean water. It is shameful that almost nothing has been done to alleviate poverty in India. Indian governments have very poor record to alleviate the miserable condition of the poor of India. The fall of Indian rupee is a natural phenomenon or law of nature. It was done in 2007, before the international economic crisis, and the food security Bill would have been applauded. The same was postponed till after economic recovery, it might be seen as a valid attempt to tackle nutrition and health and thus promote productivity. In other words, a long term investment in the economy with no damn reason, but at the height of a crisis, it looks populist and suggests the government can’t handle the downturn. So what’s the wider point we are driving at? Let us put it simply. No longer does the world view India as a shining beacon, leave aside a potential superpower of the near future. It now sees India with disappointment verging, increasingly, on disillusionment. Is this a loss of confidence? It may well be. Let’s not deny that possibility. But is it irreversible? One may nod in negative. The rupee is not sounding a death knell. It is, however, a loud, if not shattering, but announcing the demise of Indian economy. The issues are not just the economy but government, parliament and democracy. It’s the way India, the world’s so called largest democracy and “a likely superpower” functions as a country. India, itself, is in the foreground and what the world now sees it doesn’t really like.
Posted on: Sun, 15 Sep 2013 14:24:39 +0000
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