I am no economist by any measure, but two events in the last week of August do necessitate a debate. One was, of course, the widely debated Food Security Bill. Economists and market-lovers went berserk arguing why and how this is a disaster for the country: `1.25 lakh crore bill per annum to meet the basic food needs of over 80 crore of population. Days before Parliament passed the bill, there was a report in some newspapers as to how the debt burden of 10 corporates went up by 15 per cent in just one fiscal: together, it is `6.31 lakh crore as of now. We are not at all worried about this, but we are deeply concerned about the insecurity that the Food Security Bill could cause to the economy.
Without getting into a debate as to which of the two—corporate debt or burden of food security—is the real issue, the problem, as I see it, is the prism through which we are looking at what is unfolding. We have a problem when, for electoral compulsions or otherwise, the state attempts to fulfil its responsibility to take care of the needs of the poor and the underprivileged. But, we don’t have a problem when state wealth is sought to be converted into private wealth. The latter is supposed to drive economic growth while the former only makes the majority lazy and dependent.
When we talk of food security, we remember leakages. But, when stated policies are bent to favour those having proximity to power, we don’t see it as a subversion.
The few scandals that broke out over the past few years are a testimony to what is happening. Take power generation, for example. There is nothing wrong in the stated policy—improving generation capacity by involving the private sector. But how are the agreements done? Today, some state governments are paying a few hundred crores to private power firms for electricity that was never purchased. Because, it works out cheaper to shell out the minimum guarantee than buy power at an exhorbitant price. Who got the coal blocks? Companies which never had any experience in generation of power. Or, for that matter, mining in agency areas. Laws prohibit companies other than state-owned ones from taking up such an activity. What is the way out? Allot the mines first to a state company which, in turn, passes on the rights to a private firm by way of a lease agreement. We also find nothing really amusing in lands being taken away from farmers in Hyderabad to build golf courses and villas for 500 privileged people of that city. It is part of infrastructure growth.
In the last two years, according to a rough estimate, the income to newspapers more than doubled by way of advertisements given by banks towards publication of notices for possession/sale of apartments and small houses belonging to middle and lower middle class people who could not repay loans owing to declining income and rising inflation. In the very same period, there are companies in Andhra Pradesh which could obtain stay, with minimum effort, on recovery of bad loans running into hundreds of crores. We call it credit restructuring, a language that is not known to the 80 crore population. The reason could be the same: bad economy. Those who need protection from it have no protection while those who can afford not to have a cover have all the insurances to insulate them. Economic crisis, the way it is being talked about, is a smaller threat vis-à-vis the social disorder that is building up.