Tuesday , 22 September 2020

Decade after Economic Liberalisation

India liberalized its economy in 1991, opting for globalisation. Today, millions of people still go hungry in this country despite high growth in the economy. Inflation has added to their woes. Development that does not benefit the masses is meaningless.

India adopted the policy of liberalisation, privatisation and globalisation in 1991 to ensure economic growth. India is now seen as the second fastest growing economy of the world and its rate of growth is expected to hit double digist in the near future. Among the notable features of the economy in 2010-11 were exports touching $245 billion in compassion to $178 billion in 2009-10 and growth of 24.5 percent in personal income tax collection.
But there is the other side of the coin. During 2010-11, FDI inflow declined by 25 percent probably because of less efforts in convincing investors and recession in the world. This despite various categories of FDI being exempted from seeking prior approval of the Foreign Investment Promotion Board and the Cabinet Committee on Economic Affairs.
As per the NSSO, 18 crore people in urban India are living in slums and the same number of people sleep on the streets. In other words, 36 crore people have no permanent shelter. According to a report prepared by the FAO, 23 crore people in India are suffering from hunger and malnutrition, 49 percent children are suffering the same fate and 56 percent women are anaemic.
According to the Tendulkar Committee report, 41.8 percent (about 45 crore people) can afford to spend Rs.450 per month, which means they can afford to spend Rs.14.50 per day. For these people statistics regarding the rate of economic growth and GDP have no relevance.
It is often said that India is emerging as the second fastest growing economy of the world as a result of liberalisation, privatisation and globalisation. On the other hand, 22 percent of the poor of the world reside in India and one report places India at the 66th place in poverty along with Pakistan, ranked 61 and Bangladesh, ranked 70.
A recent survey has found that nearly 1,400 poor Dalits have committed suicide in the last three years due to hunger and poverty in the Bundelkhand region of Uttar Pradesh. A similar situation exists in many areas f the Poorvanchal region of the State. Between 2004 and 2009, nearly 11 crore more people have been pushed below the poverty line, increasing the number of people living below the poverty from 27.5 percent o 37.52 percent of the population.
During the last two years the prices of essential commodities have increased enormously. Unchecked inflation is a cause of concern for everyone. Because of inflation and the consequent rise in the prices of essential commodities more than 40 percent of the people of the country are struggling to make both ends meet.
To counter inflation, the RBI has been repeatedly raising interest rates, but to no avail. We are now witnessing the highest inflation in the past 16 years. Over the years pulses have become 25 percent more expensive, milk costs 25 percent more, while the price of fruits has gone up by 30 percent and that of salt by 20 percent. A series of hikes in the prices of petrol, diesel and kerosene has compounded the plight of the masses.
This issue of black money kept within and outside the country is another cause of concern. Further, there is an increase in tax evasion. During the current fiscal year (2011-12) there has been a steep rise in the evasion of Central excise from Rs.114.6 crore to Rs.227.4 crore. According to the Director-General of Central Excise Intelligence, there has been service tax evasion of Rs.1,651.3 crore as against Rs.522.2 crore during the same period of the last fiscal year.
To curb inflation, in a recent move the Government has decided to initiate some austerity measures to control expenditure. They include a ban on the creation of new posts and holding of conferences in five-star hotels, restriction on foreign trips and overseas study tours and release of funds to State Governments only after they submit utilisation certificates for earlier allocations. These measures are welcome but they should have been taken much earlier.
In addition to these measures, the administrative machinery should be activated to curb the incidence of tax evasion, Various reforms, including agriculture reforms, finance reforms, land reforms and infrastructure reforms, should be undertaken on a priority basis.
For infrastructure reforms there is need to restore the confidence of Investors because investment contributes a lot to GDP and has a strong impact on business cycle conditions. Economic and governance reforms alone will restore the confidence of investors.
Agriculture reforms require efficient storage systems and a corruption-free Public Distribution System. As we know millions of tonnes of foodgrains are rotting at FCI godowns while crores of people are starving. The Land Acquisition Act of 1894 is being misused for political gains. The Yamuna Expressway is a glaring example of such misuse. The Land Acquisition Act should be amended without delay.
We need domestic and foreign capital for infrastructure development while boosting savings. The issue of blank money is a matter of concern for the country and quick action is required in this regard.
Economic growth that does not benefit the people is of no relevance. When the NDA was in power at the Centre, Mr. Atal Bihari Vajpayee always emphasized that welfare measures should not be ignored for attaining economic growth and development. Our priority should be to ensure food, education, health and shelter for all citizens along with economic growth and development.
(Article written by Shri Kalraj Mishra in 2011)
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