Hindustan Times
Budgeting for growth
Barely a week before the presentation of the Budget for 2011-12, finance minister Pranab Mukherjee and the government’s macro-economic managers have their plates full.
India’s economy is stuck with major roadblocks- just when it looked like a challenger to China as the world’s fastest growing economy.
Food prices have remained stubbornly high pummelled by a supply crunch in staple vegetables. Weather problems in Australia, Argentina and Russia have hit global food and commodity prices, while oil prices have crossed $100 a barrel and these have knocked up prices of other goods.
Factory output growth has plunged to a 20-month low at 1.6% in December, policy uncertainties loom ahead of the budget, and corruption scandals are hitting political sentiment that can, in turn, hurt business climate.
People want Mukherjee to announce measures that would bring down prices immediately.
The common man also wants Mukherjee to reduce tax rates or change the tax slabs in a manner that it would leave more money in their hands.
India’s GDP is set to grow by 8.6% in 2010-11, but a possible industrial deceleration has become a cause for major worry.
Manufacturing output, which accounts for about 80% of the industrial production, grew by 1% in December.
Capital goods output contracted 13.7% in December in a sign that higher cost of credit and rising input cost pressures may have forced companies to defer planned investments.
The RBI has raised key policy rates seven times so far this fiscal year to cool prices.
Costlier loans mean costlier credit for consumers and higher expenses for manufacturers. Both could hit demand and growth.
There have been no major policy decisions in recent months because policy-makers cannot agree on critical issues. Spats between ministers and a parliamentary logjam have hurt governance.
Inclusion is very easy to write down on paper, very hard to carry out. Reaching to backward areas is not just a question of throwing food and money at them. Economic reforms are too catch-all a term to be the panacea for all problems.
Direct action of reach out to the poor is not easy. Plugging the leakages by creating a police force and bureaucracy to police the ration shops will not work as you would need another layer of bureaucracy to monitor it.
Growth alone is not going to deliver it. Markets alone are not going to deliver it.
In the final analysis, profit maximisation, policy reforms and equity should cease to be mutually exclusive objectives. Mukherjee can take solace from the fact that there is now growing self-interest and political realisation that lack of instability might come home to roost. And there is hope that growth and reforms will drive away poverty.
What are needed is intelligent reforms and intelligent design of policy as nothing is going to guarantee that you are not going to run into a pitfall.
Policy has to be designed so that the propensity for leakage comes down significantly.
@gaurav , This is what happens when you sell your soul to all firangi theories and books on Rconomics .NEED TO USE YOUR FILBUTie, cerebral cortex. FUNDAMENTALLY India needs a quantum leap in agricultural production. i heard Chidambarum in davos , Agricultural growth can maximally pushed to 4-5 %. Well he is a lawyer by training. He needs to know wheat output in UK is 8ton per acre , in India 2.5 ton , NOT ROCKET SCIENCE IS IT. I live in uk and know a fair bit of farm practices.THE SEED ROWING IS MIND BOGGLINGLY DENSE. In fact JOHN TYNE some 100yrs ago invented a machine to sow seeds in a orderly neat lines as he realised SCATTERING BY HAND(the practice in india) causes loss of seeds .There recently has opened a CORPORATE VENTURE called Thanet (name of a place in kent) Earth.Here the plants are fed micronutrients and water in a enclosed envirnment with COMPUTER CONTROLLED machines.Not difficult to work out THERE WILL BE MAXIMAL PRODUCTION , no crop failures and PRECISE USE of resources saving a lot of resources. Just ask yourself why Britain who use to be a perpetual FOOD IMPORTER now has GRAIN MOUNTAIN ,BUTTER MOUNTAIN , WINE LAKE ETC.Next is storage
we all saw the STATE OF HIGH TECH IN INDIA where grains are rotting in open air, WE CANT GIVE YOU FOOD , BUT WE WILL GIVE YOU SECURITY COUNCIL SEAT.Grains are stored in giant silos within the farm in uk .next is diary farming . Just search internet for PRIZE SEMEN BULL will get all the answers , .INDIA’S AGRICULTURE IS IN STONE AGE and AGRICULTURE AND LAND should not be thought as JOB PROVIDERS,land needs to be used to its maximal yield potential with minimal labour SO THAT THE PRICE DROPS, and you need either CO OPERATISATION OF FARMING , so that the land size is such that heavy farm equipment can be used.Dont jump like a typical indian , and say about the massive cost of these equipments . THESE EQUIPMENT ARE NOT BOUGHT BY FARMERS BUT RENTED,companies are there who rent it out.I am aware of SURPLUS LABOUR, then if you have enough food in the market , THESE LABOUR CAN BE ABSORBED IN NO TIME IN BUILDING MILLION MILES OF ROADS and schools and hospitals.
next is SOLAR ENERGY ,i have a feeling SPAIN produces more solar energy than India.Massive research needs to be directed to harness this source which India is blessed (far more than china)
THEN WHEN YOU HAVE DIMWITS LIKE VIKRAM CHANDRA ,BURKHA DUTT AND the banker chanda kocher who understands NUMBERS ONLY and jargons like capitalmarket ,deposit ratio etc.Too much emphasis is given on BPO which is fine ,as well as our industrialist (who are basically operating in state sponsered cartel), JUST NAME ONE INDIAN PRODUCT IN GLOBALTOP HUNDREED BRANDS.
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Vikram Reply:
February 22nd, 2011 at 5:17 pm
Top politicians of developed countries visiting India these days, simple reasons:
1. They want Market share from our country.
2. Indian government should support these foreign companies so they can support india government on national and international platforms.
3. Govt of india busy in pampering these companies and building own wealth.
4. Indian Govt can distribute money to poor farmers (in form of loan waiver etc) but not supporting with new technologies. Same like giving reservations to backwards & poor but not providing good schools and teachers.
5. Only rich farmers (5-10%) getting mileage of these policies.
6. BPOs mean spoiling young generations and no role in country’s productivity and fundamental growth.
7. We lost our fundamentals/basics when Mr. Nehru started coping developed countries blindly. Gandhi family ruling India from last 60years………..what you can expect??
8. Our PM supporting agriculture minister on Supreme Court decision for Political/collation government reason………no emotions for poor countrymen and their own cultivated food grain.
9. Illiterate and corrupt people of India will again choose these white khaki dress vampires.
10. Our money going out of India through lot of corruption.
11. But people of India become happy if rail fare go down by Rs.2/ticket. No duty on computers. Subsidies remain the same on domestic GAS/Kerosin oil — in this budget.
No agriculture growth/development can expect in these circumstances.
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Sanjiv Reply:
February 28th, 2011 at 11:07 am
this year they should officially budget for scams….so that we dont waste time later…
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limewire free download Reply:
February 28th, 2011 at 8:16 pm
trying to find you on facebook
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rajeev Reply:
March 11th, 2011 at 12:38 pm
great point of view. Because its simple. we cant avoid to compare our practice to othres. 100 years on ..we should try to mechanise some of our processes but factors like monsoon and soil need to be looke at. still whole UK is not more than a tenth of India.
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