Can India achieve a 9% GDP growth once again?

Removal of subsidies of all kinds, including those on petro-products, and tackling corruption can help India to return to a GDP growth rate of 9%

 

Deteriorating macro-economic fundamentals, rising fiscal deficits, persisting high inflation rate has resulted in economic slowdown due to political roadblocks in policy making. Global ratings agency Standard & Poor's (S&P) cut down India's sovereign rating of BBB to Negative from Stable in April. It rightly points out "The crux of the current political problem is the leadership crisis at the very top on account of the division of roles between the Congress Party president and the prime minister and not 'obstreperous' allies or an 'unhelpful' opposition -paramount political power rests with the leader of the Congress Party, Sonia Gandhi who holds no Cabinet position, while the government is led by an unelected prime minister, Manmohan Singh.

 It is rather disturbing to see India passing through a grave situation of rising food inflation, moral degradation and rampant corruption making its millions of average citizens, all living below poverty line, a suffering meek lot. All only because of the sheer ineptitude of governance at the Centre. The netas have been for long lulling the janata in a false sense of security of a great growth story that has gone all sour. The country's chief economic adviser tells us to wait till 2014 and later controverts it all!

Among the worst of the lot are the all powerful, highly privileged and grossly over-paid highly corrupt neta-babus who are rewarded with sumptuous allowances, free houses, phones, and red-topped cars. Invariably they are local political bosses who are corporators, legislators and parliamentarians, many with criminal records. They have abandoned all pretence of governing their fissiparous country to engage in shameless personal enrichment with self-serving abandon-merrily stealing and lying on oath not out of fear and favour. They are opportunists, pure and simple, relentlessly indulging in predatory looting and plundering of nation's resources. They have detached themselves from purposive governance to attain societal goals essentially on their own selfish terms without any discernable impact on policy outcomes. They fail to connect effectively with the citizenry at large-a clue to a growing disjuncture.

Corruption and patronage have blunted India's efforts to pull the poor out of poverty. According to an authoritative study, the pocket borough of the Nehru-Gandhi's Rae Bareli in Uttar Pradesh with 70.40%, Koraput in Odisa with 68.86% and Dumka in Jharkhand with 63.65% have the highest number of stunted children.  The worst of concerns of poverty across the country are hunger, malnutrition, absence of even the basic amenities like toilets, sanitation, quality drinking water and primitive infrastructure-bad roads and absence of even a primary education and health centre. It is to be seen right here, not more than 60km from Mumbai in the tribal area near Jawahar.

 At the same times of grinding poverty, the number of our crorepati MPs increased from 156 in the 2004 Lok Sabha to 315 in 2009; the number of MLAs in Manipur shot up by 563% over the last five years. God alone will know how they will appear in 2014!  Where does all the money come from? It is plain and diverting by swindling by openly selling foodgrain meant for malnourished kids to poultry and animal feed dealers, siphoning of funds from welfare schemes like the multi-crore Bharat Nirman and the Mahatma Gandhi National Rural Employment Guarantee Scheme where the netas, babus, dalals and local district officials pay only a fraction of the guaranteed wage of Rs100 per day based on whether they really 'qualify' under the scheme-a very subjective assessment, vulnerable to abuse and source of massive graft. A study by the Asian Development Bank (ADB) and Indian Statistical Institute reports that just 10% of the foodgrain reach the deserving poor under the Public Distribution System, 43% is siphoned off illegally, large quantities simply rots as silos to store foodgrain are full, what is left is eaten by rodents and most exposed to the elements. Rajeev Gandhi, way back in 1986 said that only 15% of allocations reach the beneficiaries, his son Rahul brings it to a dismal 6% today. The NAC-approved Food Security Bill is hanging fire with the agriculture ministry. The heavily underestimated subsidy bill for 2012-13 has spiraled over to a whopping Rs1,09,000 crore swallowing 25% of the budgeted  direct and indirect  tax revenue of Rs7.7 lakh crore net of allocations.

According to experts, removal of subsidies of all kinds, including those on petro-products can help India to return to a gross domestic product (GDP) growth rate of 9% by creating productive assets in the other India wherein the millions live in the countryside, by helping the poor build independent livelihood. There is an urgent need to boost food productivity and cut out middlemen in the food chain. Taxing the rich farmer, which has been avoided to attract rural vote banks, is really an overdue measure.    
 
Compounding it all are the exposés of scandal after scandal with skeletons tumbling out of the cupboard of liberalization and privatization. All short-changing the people, plundering public wealth and enriching the select neta-babu pockets by entrenched interests in a culture where everyone suspects and no minister and bureaucrat trusting another- all leading to stalling the economy from the lack of decision making. The major corruption scams allege $500 million rice export, $1.5 billion Commonwealth Games, $40 billion 2G spectrum and many yet to come to light, not to forget Laloo's fodder scam, undecided because of high political stakes.

 Needed to add to this are the self-seeking educated class, heading towards moral and intellectual bankruptcy, forgetting self-restraint and sacrifices so essential for nationhood. It is well-known that our top-notch professionals attorneys, surgeons, movie stars, designers demand huge sums in cash and don't issue any receipt.  Down the line plumbers, painters, carpenters, shopkeepers collect cash and avoid taxes.

 Not all that Kejriwal & Company had collected came by way of crossed cheques. He is reluctant to put India Against Corruption's (IAC) audited or unaudited income and expenditure on public domain. If they really have the interests of the nation at heart, rather than bark up the wrong tree of fasts and dharnas, they ought to come out with concrete ways and means to curb black money, to stem the flight of our funds abroad through pro-active vigilante movement of taking the bull of black money and its sibling corruption by the horn.  

The Planning Commission, a top heavy Nehruvian Soviet-era white elephant, is caught recklessly indulging in huge spending and thereafter offering inane unconvincing explanations for spending over Rs2 lakh a day on foreign junkets and also incurring Rs 35 lakh on e-toilets exclusively for its high-ranking babus, even as millions live and defecate on the roadside and in the fields, in most insanitary conditions. The former chief minister of Goa has installed an air-conditioned sensor-operated toilet spending Rs20 lakh in his constituency of Margao and spent a lot of time in justifying it at an assembly debate.  

These days press reports highlight that the present rudderless leadership is belatedly waking up too late to realize how much it has fallen back from the high water mark of the dream of taking the GDP growth to double digit territory in stead only to find it sliding rapidly in the reverse-the steeply falling stock prices, the rupee: dollar parity going adverse, dipping industrial production and exports resulting in domestic inflation sky-rocketing-all hitting the aam admi's food bills very hard. Pranobda, the senior-most and finance minister, is said to have stayed away from the PM's austerity measures meeting. After all austerity, per se, is not seen to be applicable to the president-present and the would-be one too!

A lot of Indians are really rich; all itching to figure in the Forbes' List of the World's Richest but at the same time the real Other India continues to remain poor, the poor getting poorer! The White Paper on Black Money dubbed by experts as a Blank Black Paper has mysteriously and miserably failed to pin-point the quantum of black money, even when there are enough estimates of the black money in circulation. The so-called reduction of Indian money stashed in Swiss banks deposits from Rs23,373 crore in 2006 to Rs9,296 crore in 2010 (God alone knows why were the latest numbers of 2011 or 2012 are not sought?) remains unsubstantiated. With enough notice has it been moved elsewhere or to other entities or rerouted via the FII/FDI routes? With India getting poorly rated downwards  investor confidence in the economy waning-FIIs have been seen to withdraw and some Indians going back to Switzerland and newer tax havens-New Zealand is said to be the latest venue.

Ever since the 2005 Comprehensive Economic Co-operation between Singapore and India was operationalized, the tiny Singapore with a population of 6 million is the second highest investor with 9.71% of FDI with investments to the tune of $15.67 billion between April 2006 and November 2011. The Indian Ocean island of Mauritius has 41.8% between April 2000 and March 2011. Both of them even put together, are in no position to generate funds of this order but seen to simply act as convenient conduits for laundering by round-tripping the Indian black money. Surely the High Powered Task Force could have accessed them to arrive at reasonable guestimates.  

The hitherto considered clean PM is perceived to be a dummy without any power as authority lies elsewhere. The Team Anna that held Parliament to ransom over Lok Pal has thrown up new black sheep within with Kejriwal and Bedi accused of accounts fudging, Shanti Bhushan forced to cough up crores with heavy penalty on default of evaded stamp duty on property purchased and son Prashant questioning J&K accession. Anna is hijacked by his team with a dubious Sarkari Sadhu, Ramdev joining the bandwagon despite multiple economic charges against his entities. All making it the pot calling the kettle black!

PPPP now has a new nomenclature of Public-Private-Philanthropic-Participation. More and more purely individual western philanthropic initiatives have been playing significant roles by coming in to funding areas traditionally reserved for governments providing socially valuable inputs and at the same time not expecting financial gain in return. We owe our Green Revolution to the Rockefeller Foundation which supported Dr Norman Borlaug in developing newer strains of wheat. Since 2003 the Bill & Melinda Gates Foundation has invested over $1.2 billion in India-much of it in public health programmes focusing on immunization, maternal, neo-natal, childcare and HIV prevention. It is rightly pointed out that this kind of philanthropy, where the businessmen give for public goods in collaboration with government agencies, is quite rare in India. Not that it is unknown-the house of Tatas funded the Indian Institute of Science in Bengaluru, TIFR and Tata Cancer Hospitals in Mumbai and Kolkatta. There are others like the Ramakrishna Mission which is already doing good work and highly qualified people of Indian origin waiting for favourable climate to pump in funds into India.

Surely more needs to be done with a dozen Indian tycoons figuring in the Forbes List of the World's 200 Richest. Public health, sanitation and elementary education are areas that government can provide resources like land on a large scale. But that should not stop it from creating favourable markets for the wealthy to chip in with their financial and managerial resources in projects delivering only high social returns. It has to be a win-win situation for all.
 
 In this Not-for-Profit-Partnership, the donor-partner should also be given a say in how and what scheme their money is to be spent. The fund-strapped central government needs to seriously consider this as a means to bring in social changes by mitigating health and other serious concerns.

(Nagesh Kini is a Mumbai-based chartered accountant turned activist.)

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