Prof. M. K. Bhat
The people of Delhi found a respite in the freebies of Arvind Kejriwal and voted en mass for him in the election 2015.He assured any and everything free of cost to people ranging from free Wi FI, water, power, schools, health centers, Pucca houses, health care centers, CCT V’s etc .This may cost Delhi more than its budget. People having got sick due to inflation, wrong attitude towards women, bad public facilities found a prophetic message in these words without ascertaining their practicality. The inflation in recent months has no doubt stabilized but the difference at the consumer level is at its minimum .The apprehension is that BJP with this defeat is likely to take its reform steps in a very calculated manner. Modi government with an eye on coming state elections may feel it suicidal not to take populist measures and the real causality will be the development for which people voted Mr. Modi to power, with an absolute majority. It’s almost non acceptance of the food subsidy reduction to 40 percent people (as recommended by high powered Shanta Kumar Committee on food security) from 67 percent currently is a pointer towards this direction. Populist measures no doubt can help political parties to reach the citadel of power but may make it difficult for them to retain it for too long. Such moves can be termed as good politics but bad economics.
It is not AAP alone that practiced this type of luring to public but others too apply this technique. AAP got benefit because it had no previous history and others with history have been tested time and again. Their history of failing to perform election manifestoes has made them less trustworthy for people.
Swatch Bharat, Food security and other types of social security are things of the same ilk and require money, cannot come free. These things can be possible with prosperity and the latter depends upon the level of production in an economy not on the whims and fancies of the politicians. The investment requires Funds. These funds can either be domestic or foreign, besides it requires skill, investment environment and willingness of the government to do good for people in real sense rather than rhetorics.
The current status of the economy is that, the Domestic savings are on a decline, production sector is not performing at the required level, the non performing assets of banks are on an increase, India’s external debt to GDP ratio stands at 23 percent and Center’s overseas barrowings are on an increase. Corporate barrowings valued at $161 billion amount to 8.5 % of GDP. Corporate sector is trying much to get foreign funds but is feeling it too difficult, due to its high level of debt. The other option to finance growth strategies with the government may be in the form of disinvestment. Center has managed to raise approximately Rs22,600 Crore about 38% of its full year target disinvestment of Rs58425 Crore by selling 10 percent of the Coal India limited .It may have to plan further disinvestment to support its development agenda. The government can raise foreign funds to finance its development projects by allowing financial institutions to raise their funds in foreign countries as the earlier NDA government had done during Vajpayee’s rule. It may not be out of context to mention here that there is enough liquidity in the international market at present and this can be tapped only through changes at ground level in case of ease at doing business.
Good economics stands for the welfare of masses rather than the good of a few at the cost of many. Big industries may help us to get a good swing in our national income but they will also widen the economic gap between the rich and poor in the country, It may add billionaires to our list but the common man may find himself in isolation in this glittered environment. The cities may further deteriorate and smart cities will not be an easy dream. We shall not get swayed by the big picture of Make in India .In my previous article titled ” Make in India- Is it a solution” in this paper I had raised the issue of its success as an alternative to our economic problems even today I feel that few big firms will not solve our basic problems.
The need of the hour is to concentrate for big industries in the areas where small scale may not be in a position to deliver. MSME,s play a crucial role in providing large employment opportunities at a comparatively lower capital cost than large industries .They also help in the development of rural & backward areas. MSMEs are complementary to large industries as ancillary units.
The SME’s contribute nearly 17 percent of country’s GDP, 45 percent of the manufacturing output and 40 percent of the exports .They are the largest employers after agriculture, provide jobs to 40 percent of India’s work force .They are widely dispersed in the country, produce diverse range of products and can go a long way in removing unequal distribution of income in the country .They may therefore contribute to the socio economic development of the country. This will also stop or lower the pressure on cities as the migration of workers may decrease .India with 48 million has the largest number of SMEs next only to china with 50 million.
Their problems like poor technology, low skills, financial and marketing problems need to be addressed as they lead to their low productivity. Some of them stay small and unregistered to avoid taxes and regulations.
The other area of prime importance is agriculture, its mechanization, development and encouragement of agro based industries will help the country to attain good results for masses. The successive governments have failed to realize /upgrade its potential. It employs the maximum population but the scant attention to this sector has lead to an imbalance in the economy. It is the principal source of livelihood for more than 58% of the population of this country. Agriculture provides the bulk of wage goods required by non-agriculture sectors and most of the raw materials for the industries sector.
During the 12th Five Year Plan, Ministry of Agriculture is trying to focus on a higher food grain production to ensure food security. For sustaining higher levels of production, it is necessary to target new areas of food grain production, while promoting protecting agriculture in the high production areas, to maintain a higher level of productivity.
The Agriculture and Allied Sector is estimated to contribute approximately 13.9% of India’s GDP (at constant 2004- 05 prices) during 2011-12. Its contribution has been a continuous decline over the years .The contribution of Agriculture and Allied Sectors to the GDP of the country declined from 16.8 percent in 2007-08 to 13.9 percent in 2011-12 at 2004-05 prices. This decline indicates low attention to the problems of this sector. The food processing industries, horticulture, floriculture and aquaculture need to be given special priority to make the slogan” Sab Ka Sath Sab Ka Vikas” a practical.
(The author is Deputy Director (MAIMS) Guru Gobind Singh Indraprastha University Delhi)
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