Monday, December 5, 2011

A billion dreams shattered; and socialism raises its head again…..

The FDI proposal in multi-brand retail has been “held back”. No, make that “rolled back”. TV channels last night reported that the government has decided not to push for FDI in the aviation sector also. Some other sources indicated that FDI in insurance and the pension sector was also pretty much likely to be abandoned. What’s surprising about all this? I had indicated as much in my post dated November 30th: “Rolling back FDI in multi-brand retail will only worsen matters for the Congress….” A billion people could have benefitted from FDI in multi-brand retail and other reforms. But their interests have been sacrificed by all politicians together. And without doubt, the next era of socialism is around the corner.

All politicians are responsible for the mess that we find ourselves in. The Congress clearly mishandled the FDI in retail issue – failing to resolve the issue internally with its allies before making the announcement. The BJP played opportunistic politics – as is its style – preferring to haul the government over the coals to following its own well-known preference for foreign investments. The Left – living as it does in an anachronistic world of its own – watched the events unfold with glee. Every other political party – under the pretext of protecting farmers or some such falsity – also opposed the FDI. With the hold back or roll back of FDI in retail a certainty now, the entire reforms process has been dealt a body blow.

The government’s own political management has been pathetic to say the least. This blogger has been speaking of a billion people who could have benefitted and whose interests have now been compromised. But I have never heard any government manager projecting the FDI as a pro-people move. A move that may cause some anxiety to the neighborhood kirana store (but wont shut him down), but which will help the aam aadmi tremendously. The Congress should have turned the tables on its political opponents on this subject. It could have embarrassed the BJP by pointing out how the BJP – which claims to stand for the urban middle-class – had chosen to ditch its constituency on this issue. But it let the opportunity go by. It failed to see the widespread support it had on this issue. It appears that the Congress has put blinkers on – and this to me is evidence of its losing touch with the people.

What should we expect now from the Congress? It’s obvious really. The party is unlikely to touch anything remotely connected with the word FDI. It’s likely to go back to its much-preferred socialist agenda. Expect more social schemes, more subsidies, bigger benefits…..The Food Security Bill is sure to be passed (assuming Parliament is allowed to work) since the Left (and their B team, the TMC) is bound to support it. The NREGA payouts have already been linked to inflation. Papers recently reported that the NREGA is now experimenting with “advance payments” – in other words, money will be paid to beneficiaries before they start the work (ostensibly to cut the long delay in payments that is being seen now). The 4% reservation for dalit organizations in government procurements has already been approved. The reservation for Muslims and other minorities within the OBC quota is also likely to be passed soon. And of course, that disastrous move to re-define the creamy layer for eligibility of OBC benefits at an income level of Rs 12 lacs per annum has also already been passed.

Frankly, I wouldn’t be surprised if the government now considered raising Income tax and corporate tax rates. After all, if a socialist mindset has gripped the Congress (and Parliament itself), then how can one resist the temptation of taxing the better off more? Why not raise customs duties to earlier levels – after all, foreigners are managing to export their wares to India at cheap prices – and possibly harming Indian industry. With high interest rates, and high corporate taxes, and a larger roll back of liberalization, we might as well say goodbye to the miracle that the world had started calling India.

Each and every politician is responsible for this state of affairs. All of them have conspired to keep a billion people trapped in primitive times. The youth of tomorrow can now only expect to working at the baniya’s shop… a life of servility and poverty. A few months back, we were talking of inviting global universities to set shop in India. Now, we can kiss that goodbye. After all, foreign univs may teach us their philosophies; their way of thinking; and make us their slaves again. When the discussion becomes illogical, nothing can stop it from going into the domain of the insane.

No one bothered to consider the fact that in 1991 also, all opposition parties had objected to the liberalization program. The BJP itself had been opposed to it. Today, no one talks of any problems that arose as a result of the opening up of the economy. GDP growth rates have soared; employment has increased manifold; more than 300 million people have been removed from poverty. Today, everyone acknowledges that India found its groove only after 1991. Domestic industry was worried that they would get wiped out. Who got wiped out? No one. And yet, today, all politicians have ganged up to block further reforms. By blocking reforms, they are only blocking India’s progress….

With the Congress on the backfoot, the opposition should be looking for delivering what could perhaps be the final punch needed to knock down this government. For the BJP, the option is to either do the job itself or wait for Team Anna (its partner?) to do so. With Anna singling out the Congress for attack, and refusing to criticize other political parties for blocking Parliament, the fast that he plans to start another fast should be a hard-enough blow to crush the Congress. When that happens, a self-respecting government would prefer to quit and seek a new term. Not so the Congress – they will prefer to continue to rule – no matter how impossible its functioning becomes. After all, hugging on to power is the one thing that keeps all politicians going.

The real truth is that a billion Indians – farmers, consumers et al – have been compromised by our politicians. Their dreams of becoming prosperous one day have been badly compromised. India needs all the investment it can get – whether foreign or domestic. By shunning FDI, we have shot ourselves in our foot…..

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