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Saturday, 14 February 2015 00:00
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Jaitley does well to reiterate reforms-jobs link

Finance minister Arun Jaitley has done well to reiterate the fact that the government is not going to slow down on its reforms drive just because the BJP had suffered a humiliating defeat at the hands of Arvind Kejriwal’s Aam Aadmi Party (AAP). After the BJP lost the elections, several BJP leaders have been seen questioning the wisdom of some of the reforms, especially the ordinance to clean up the UPA’s Land Acquisition Rehabilitation and Resettlement (LARR) Act and the various prohibitions put by it on land acquisition and even private sector purchases. Also, with more parties emboldened by the BJP’s defeat, another view is that it makes sense for the BJP to go slow on “anti-people” reforms. Doing this would be a bad idea for a variety of reasons. For one, as Jaitley has pointed out, the BJP has done very well in four assembly elections before the Delhi one—a 4:1 score, assuming the Delhi defeat was a reaction to economic reforms, is not something to get worried about. More important, prime minister Narendra Modi was voted precisely because people were fed up of the economic stagnation that led to no jobs and rampant price inflation during the UPA tenure. Fixing this is what is going to get growth back and given how, whether any party admits to it or not, reforms tend to slow down prior to elections, the last thing the BJP wants to do is to waste this window of opportunity between the Delhi elections and the ones in Bihar, whose Assembly’s term ends in November.

While the land acquisition ordinance is seen as anti-farmer by some, the fact is that land is required to build factories, roads, office, cities, even for setting up solar power stations. And that land, by and large, is available only with farmers who, given higher wages in industry and services, anyway need to be moved off the land if poverty levels are to come down. No one is in favour of forcible acquisition of land, but if the price is right and farmers are willing to sell their land, why should the process for this be as tedious and time-consuming as it was under LARR? And, in any case, the ordinance promulgated protects the significantly higher levels of compensation. Similarly, labour law amendments being done by various states are aimed at creating more jobs as compared to thecurrent laws that, with their rigid practices, actually discourage formalisation of the work force. With over half the subsidised foodgrain not even reaching the target audience, it can be no one’s case that leaving this unreformed is in anyone’s interest apart from the grain thieves. More so since the MSP-driven procurement system, in turn, distorts agriculture markets and drives farmers to produce morewheat and rice and, in the bargain, drives up prices of other farm produce like fruits and vegetables. The list is a much longer one, but the short point is the status quo favours only a small proportion of the population; the majority can benefit only if they get more jobs and if inflation levels come down—neither can be achieved without much higher levels of reform. That’s what voters elected Narendra Modi for.

 

 

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