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Congress needs a plan, just a diatribe is of no use PDF Print E-mail
Thursday, 22 March 2018 04:06
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Its economic resolution rips into the BJP but offers no concrete indications of what it plans to do to fix things

 

Given the sluggish economy, slow growth of exports, widespread agrarian distress and the poor pace of jobs creation, it is easy to criticize the government for mismanaging the economy, as the Congress party has just done in its economic resolution, despite ‘a near perfect alignment of stars’ including a global upswing and low oil prices. The problem, however, is that beyond this, there is little in the resolution to suggest the Congress has a reasonable alternate strategy; indeed some of the facts it cites appear at variance with the reality.

 

So it talks of the paralysis of the banking sector, a threefold increase in NPAs since it left power and allowing cronies to defraud the banking sector. Given that the current crisis has its origins in the UPA period – though the issue of whether banks were directed to lend to certain firms is difficult to prove – it is amazing to hear such a charge even being leveled; and while it is true that Nirav Modi fled during the BJP’s tenure, there are many more instances of banking fraud during the UPA tenure. And given it was the Supreme Court that cancelled telecom and coal licenses issued prior to the BJP government coming in, it is difficult to see how the Congress can argue “the starting point of the banking crisis was the unwarranted criticism of the telecom, coal and power sector policies of the UPA government that was trumpeted by the BJP”. Indeed, a large swathe of NPAs are due to the UPA’s failure to provide fuel linkages in time. Similarly, given the sharp collapse in inflation since the BJP came to power, the charge of “rising inflation expectations of households” makes little sense. And is not clear how the Congress can cite a fall in central government expenditure on health and education; a slowing can be argued, but that has to be seen in the light of the dramatic increase in the tax-shares the states got after the finance commission award.

 

If there is a valid criticism of the Modi government, it is that it has not dismantled some of the bad policies of the UPA and of previous Congress governments – the retrospective tax, the land acquisition act (he tried and failed), the food security act, bank nationalization, disinvestment as opposed to privatization, etc. Certainly the Congress is right in saying the farm sector did better under it, but that was the result of a favourable commodity cycle – the Congress did little to free agriculture markets or to move away from wasteful subsidies towards productive investment; it is to Modi’s discredit that he too has not been able to do this. It is nice to hear the Congress talking of the need to revive exports, but how can this be done till the root causes – rigid labour policies are one of them – are tackled? Indeed, even the limited labour reforms in a few BJP states is criticized as resulting “in an atmosphere of uncertainty, insecurity, rampant exploitation and large scale siphoning of (sic) the employee’s wages into the pocket of the BJP leaders/their favourite contractors”. This is not the economic resolution of a party that has a concrete plan to fix the economy.

 

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