Wednesday, July 2, 2014

Seriously Speaking - It feels like a Deja vu

                  How would you describe a government which after having promised the moon crash lands the dreams of millions into the pit where it becomes even harder to get paid to own the basic needs leave alone owning the inflation?, Capricious, inept, deceptive, Incompetent, whatever be the word that one may choose to use it would be right in describing this new government which is on a spree to fix the fiscal fallacies at the expense of the gullible ordinary people of this country who are being made to believe that spending more would result in the betterment of the services provided by the government, while the fact remains that its just an effort on the part of the government to make the people acknowledge that the money that they have will buy less than what it used to yesterday. In a slew of measures adopted to make the balance sheet of The Indian Railways look good the newly elected government instead of showing proclivities towards choosing to do away with inefficiencies chose to raise the fares by 14 %, inefficiencies that have been plaguing for a long time at every level, starting with nonexistent efficient traffic flow analysis that could be translated into efficient resource management to not doing away with the outdated factious three tire structure on departmental lines which have been weighing heavily on the performance of the state owned enterprise, the government should have looked into the real issues to arrive at real solution's. But Nope, it had promised the moon so it had to come up with a brilliant idea to make people get used to the fares it will be charging while it really starts sending them to the moon. This 14 % hike in the fares might end up adding more or less 8,000 crore rupees to the state enterprises kitty which on the whole generates an annual revenue of 1,20,000 crore rupees, this meager addition to its kitty will have no impact on its entire outlook if it chooses to ignore the anomalies or inefficiencies and sticks to the established huge bureaucratic structure.                                            Governments across the world which have been elected democratically when forced to confront the realities of the after math of major financial crisis's, whether it be the 70's secondary banking crisis or the mid 90's Asian crisis or the recent sub prime crisis which resulted in the undoing of the hegemony of major financial institutions have all adopted a common stance of fiscal prudence initially only to indulge in fiscal profligacy during the latter part of their tenure's. And so now while this Newly elected government keeps itself busy by raising import duty on sugar, and prices of diesel, petrol, LPG cylinders and of various other essential commodities adding to the burden of all ready thinly stretched finances of ordinary house holds in this country, one wonders why this government has not been proactive in taking any kind of concrete measure to recover the illegal wrongful and irregular expenditure made by Reliance industries limited to the tune of 1.8 billion $ ( more or less 9,000 crore rupees ) when it went about drilling for gas in the KG basin. Further more Reliance industries limited has been very adamant in not furnishing the records for these expenditures to the Comptroller of Auditor General, in a country where an NGO could face cancellation of its FCRA registration and could have its bank accounts frozen for not furnishing records for a mere 2 lakh Rupees, this government seems to be dillydallying with a huge smile on its face about what it should be doing with a company that has openly flouted the Norms and the laws of the land, even while being aware that Reliance industries limited is sitting on a huge cash pile of 80,000 crore Rupees. How should one construe this?, Should this be construed as the rap on the head of that ordinary citizen who voted for this government in response to the democratic right he was called to exercise, and as a mean conviviality to oblige him in return with a government that has the kleptocratic and oligarchic signature all over it which sure seems like would only aim to legitimize the ill ways of crony capitalism.
                       Though the BSE index has been gaining new ground since April and has almost soared 14 % the Real inflation figures for the same period have been hovering dangerously at around 10 %, clearly indicative of the fact that cheap money is being herded into the speculative market's not based on the underlying strong economic developments but rather based on the need to boost the prices of certain assets as a way to hedge against the risky ones that firms and companies hold in their books, and that's quite the reason why Despite the euphoria in the financial markets there have been very little investments made to add new productive capacity, almost all the major firms are preferring to buy back their shares and are engaging in mergers and acquisitions and continue to increase their debt in spite of  the lackluster short term prospects. This and the recent fiscal deficit figure of 45.6 % of the budget only points in the direction where there is going to be no respite from the inflation anytime soon even though the government has been making it clear about the step's that are being taken to cull the spiraling inflation. A lower inflation figure would mean higher servicing cost of government debt, and the other privately held debt, which in other words mean that government might be proactive in trying to keep the prices of a basket of food items a few notches down but wouldn't be as proactive as it should be in curtailing the cost of commodities, industrial raw materials and farm inputs, which goes on to say that people will eventually realize who will be footing that bill ultimately and when they do they will curse their moon and stars. Dreams and promises can be sold like a product but once they have been bought they don't behave like one, for ideas and promises to become realities it would take more than the efforts put in by the multi crore propaganda machinery to broadcast those ideas and promises through every available medium, it would take more than the effort of using politics of resentment to further ones own political agendas, it would take more than a mere effort of carpet bombing marketing exercise of an unprecedented scale, it would take an enormous will to generate profits not at the cost of the gullible people but at the cost of expanding economic activity, increased savings rate and median wage. 

1 comment:

Clue Dance said...

Your economic analysis of the Central Government is authoritative. Thanks for the insight you put in to the minds of the reader, for the realization you provide to keep them from ignorance. Are you by profession an economist?