Millennium Post

No tight belts, Chidambaram!

The Statement of Finance Minister P Chidambaram that the economy was in dire straits and that belt-tightening measures had to be taken, made to colleagues on Thursday, is somewhat surprising. This is completely contrary to what the government has been claiming so far about the state of the economy. The government has been denying that the economy was in doldrums. It has claimed that the reports that have suggested that the economy was doing badly were false and that the economic climate was not pessimistic. Why is it changing its stand now? Has something new happened in the last few weeks that the public has no knowledge of?  The previous finance minister and Manmohan Singh as well as others in the cabinet had even been claiming a seven to eight percent growth rate in India before Chidambaram took over. So what has gone wrong now? Or had the government earlier been making claims that are insupportable? In fact, the economy seems not to be doing too badly. There seems to be no immediate crisis in agriculture. Thanks to a late monsoon that brought up the rainfall to almost normal, agricultural production has not stagnated this year, inspite of the government not coming to the aid of farmers in a big way. It is a similar story with industrial production which has been jogging along at a not too unreasonable rate. Though the rate of production is not optimum, it nevertheless seems to be a growth path. It  is true some sectors of the economy are doing better than others but none seem to be stagnating and some are racing well ahead.

The government’s current policies have not encouraged optimum growth. In fact, some  of the booms and lows are not normal but artificially caused, largely by the government’s misguided policies  and the businessmen, industrialists and people are suffering. Everyone will face the music anytime if the governmnt continues like this. The government is also paying more attention to retail and and not so much to domestic industries. It has ignored some important sectors of the domestic industry, and seems to be encouraging some particular companies at the cost of others. This is not seemly. Injection of capital should not be at the cost of the rise of Indian companies. The country must take heart from the policies followed by some state governments which are following extremely good policies and encouraging domestic investments.   The finance minister should not go against  his own government’s stand like this. The finance minster should come clear on the state of the economy. There has to be more transperancy in government. His statement is a reflection of a domestic economic policy that makes a travesty of any sound economic policy.
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