I learnt some of my economics from luminaries like Jagdish Bhagwati and Amartya Sen and no wonder my economics remained befuddled. However, it did not require a post-graduation in economics to understand that I could only spend what I earned and if I wanted to earn more, I produced more, worked harder, saved and invested. Alternatively, one could beg, borrow or worse, steal. In each case, you had to pay for it. We seem to have forgotten this basic lesson of life.
The citizen’s hard earned money has been taken away with no other source of income left, in pursuit of grandiose schemes that he does not understand nor does he agree with. Money is borrowed from the public and more will be borrowed to pay back previous loans, or in other times, simply by printing more notes. It is forgotten that if this common Indian does not earn the government cannot collect revenue from him. If he cannot earn, he simply dies.
This is what we are doing to our economy -- simply shutting it down. From a robust 8% rate of growth we have reduced ourselves to less than 5% and slowing, through our special genius for spoiling a winning game. The rate of growth, according to some economists, will hit a low of less than 3%. Vegetable prices have risen by 48% and, surreptitiously, the cost of electricity has been pushed so that my electricity bill is up 40% from two months ago. And this happened before the just announced 10% pension DA hike. The new land acquisition bill will knock off 2 % of our GDP. The price of petrol rises regularly, our energy import bill accounts for 80% of our foreign exchange earnings and we import 90 % of our defence needs.
We were told that our young population was going to be our strength for the future, that this demographic dividend was of such a magnitude and advantage that it would not happen again for another 300 years. Yet what did we do? Our populist policies have taken away their future, and that of the entire nation. Our priorities should have been to create skills and employment for the 500 million young by the next decade, where each individual is an asset to society, contributes meaning- fully to the net national product and to his own self-respect. Instead, our policy seems to be keep people perpetually on the dole and create additional burdens to society. Where will the money for all these pre-election entitlement schemes come from when the economy is declining and government revenue too will decline? How will this government or successive governments provide for the jobless hopefuls on the street with their dreams soured?
Our problem has been we never corrected the faults and punished the defaulters. Instead, if there was a coal mining scam, we stopped the mining of coal. If there was a scam in the mining of iron ore, we stopped exporting iron ore and starved both our power and steel industries. Instead, we began importing both coal and iron ore. If there was a defence scam, we stopped buying defence equipment and endangered our security. We perfected decision-making to taking no decisions.
Incidentally, where is our corporate sector in all this, the shining example of our success story, which has not been wary of bending the law or subverting it when a quick buck was to be made but which has promised to lead us to our El Dorado? Scared of investing in their country of birth because of the fickleness of the politician, the capricious nature of its laws where they can be taxed with retrospective effect and the whims of the all powerful bureaucrat, they seek to invest abroad. This is hardly the best advertisement for greater foreign investment in India.
A government cannot legislate the poor into prosperity but can legislate the wealthy out of prosperity; it cannot multiply wealth by dividing it. The greatest danger is when half of the people begin to believe that they need not work because the other half is going to take care of them, and when the other half believes that there is no point in working because somebody else is going to get what they work for. That is the beginning of the end.
From being a soney ki chidia that we used to call ourselves, we now have a brass albatross around our neck.
-- The writer is a former chief of Research and Analysis Wing (RAW)