Voters Are Useful Idiots for Power Hungry Political Parties
By Shankkar Aiyar | Published: 02nd February 2014 06:00 AM |
This Thursday was an eloquent testament to why India is where it is!
The UPA regime, on Thursday, arrived at a new formula for combating inflation fuelled by populism. It is quite simple: increase subsidies. It calculated the price of a middle-class vote to be one-cylinder-per-month and declared that every family would get 12 LPG cylinders at a subsidised price per year. It didn’t matter that the economist Prime Minister had told Indians—barely 16 months ago—that subsidies need to be capped and that “money does not grow on trees”. In January 2014, the UPA seems to have achieved a fundamental breakthrough in political-botany. Money, it seems, can be grown on trees if it is the poll season where votes have to be irrigated.
On Thursday, irony died many deaths as cause arrived alongside consequence. The government informed India that GDP growth last year (2012-13) was not 5 per cent but lower, at 4.5 per cent. Also, while the bluster may be about making India a “manufacturing super-house” the harsh truth is that industry/manufacturing/mining grew at the slowest in 20 years. Instead of growing, the share of manufacturing in GDP is in fact shrinking. Growth in the services sector is down to 7 per cent and the once-booming double-digit-growth sector seems to be fuelled in part by the loans “roll-over-coaster” in the financial sector. The persistent slowdown in the economy over 10 quarters is most visible on vacant billboards, slowing sales and deep discounts on most manufactured goods.
In the scheme of the Congress, what was wrong in September 2012 can be certified as right, nay correct, in January 2014. It didn’t matter that its definition of poor eligible for entitlement—in this case, fuel subsidies—now covered 97 per cent of the population. It didn’t matter that three of four rural households depend on firewood and chips for cooking, that over 650 million people do not use petro fuels and that the expansion of subsidy had no merit. It didn’t seem to matter to the government or party that the bulk of the people who this government claims to represent politically will not benefit from this move.
It doesn’t matter to the UPA regime that under its watch, subsidies—and these are declared subsidies—have shot up from `45,000 crore in 2004-05 to over `2.5 lakh crore. It doesn’t care that enlargement of subsidy would lead to expansion of deficits and further fuel inflation. It doesn’t matter that government borrowings have grown eight times in 10 years. Consider the magnitude of populism unleashed by the regime. Take the expenditure on MGNREGS, the 2008 loan-waiver, the new FSB and subsidies to understand why this government has to borrow even to pay interest on its borrowings and why despite many promises and many rate hikes, consumer price inflation is hugging the double-digit mark.
Typically the Congress has deployed one wrong to defend another. Its spokespersons have taken to citing numbers from the revenue foregone charts in the budget. The argument: if the corporates are given incentives, why deny the poor subsidies. First, many of those exemptions benefit individuals, salaried persons and price protection to critical consumption goods. Second, two wrongs don’t make a right. There is a case for ending or at least trimming exemption raj, connect it with job creation. There is also a case for taxing high rollers more efficiently—long-term capital gains tax on incomes of, say, over `100 crore, tax on asset transfers during succession, wealth tax on the Indian dollar billionaires who cumulatively own over $300 billion in wealth. The Congress-led UPA didn’t address it. But that is no justification for nationalising party costs for political profits.
A high-growth, low-inflation economy has been reduced to a high-inflation, low-growth economy. It doesn’t seem to matter that growth is already threatened by inflation and worries about job creation have given way to anxiety about job losses. This government came to power promising inclusion. It has also invoked the thesis of demographic dividend as a magic mantra through its 10-year tenure. Consider these facts:
● 13.3 per cent of the youth between the ages of 15 and 29 are unemployed (usual principal status);
● One in three persons holding a degree in graduation and above is unemployed (15-29 years);
● Over 26 per cent of graduates in urban India are unemployed;
● 36.6 per cent of graduates in rural India are unemployed;
● And for a government that has cooed and crowed about rural development, unemployment is at its highest ever in rural India.
Thanks to longer delays in getting jobs, over-skilling and over-education now co-exist with under-education and under-skilling. The Report on Youth Employment and Unemployment Scenario (2012-13) by the Ministry of Labour is a shocking reality check for those pinning their hopes on “demographic dividend”.
The tragedy is that there is no real constituency in India’s political landscape for reforms—for empowerment economics as against the epidemic of entitlement economics. Neither of the two national parties is embarrassed about crony socialism. And thanks to the rise of lollipop politics—look at the race for cutting power tariff—worse will follow.
Like it or not, political parties see voters only as useful idiots in their perennial quest for power.
Shankkar Aiyar is the author of Accidental India: A History of the Nation’s Passage through Crisis and Change