Rosy picture
24 Feb 2015 9:41 PM GMT
Amidst scenes of snoozing Parliamentarians, President Pranab Mukherjee painted a rosy picture of Indian economy in his annual Budget address. Although Mukherjee reiterated the present dispensation’s motto of “sabka saath, sabka vikaas” while addressing both the houses of Parliament, ground realities paint a very different picture. To begin with, the President said inflation and food inflation, in particular, are at a record low due to a number of “decisive measures” taken by the government. One is not sure how the present dispensation can make such claims, as ground realities point to the contrary. Prices of most food items have been rising up slowly through the past year, despite several so-called ‘reform’ measures undertaken by the government.
While staple foods like wheat and rice have witnessed a marginal rise in cost, the prices of pulses like masoor and arhar have reportedly soared by 30 per cent. Also, the prices of vegetables and fruits have risen by 20-50 per cent, barring a few exceptions. For example, onion prices have soared by 40 per cent and tomatoes by 33 per cent. Unlike the dramatic spikes witnessed during the erstwhile UPA regime, food inflation has taken a rather slow trajectory under the present government, steadily rising over a period of months. The effect, in both cases, is families are left with tighter household budgets with very little leg room for other essential purchases. This slow-burning inflation, some political commentators believe, is what resulted in the disaffection of Delhi’s poor with the BJP-led central government in the recent assembly elections.
The President also unfortunately dabbled in some statistical jugglery. Inflation rose marginally to 5.11 per cent in January from 4.96 per cent, as per the new base year for calculating prices, adding more weight for services like education and health. Although inflation has slowed sharply over the past year, it is still high when compared to most countries. The rate in our fellow BRIC nation South Africa is at 4.1 per cent, Philippines 2.4 per cent and Malaysia 1 per cent. Indulging in further statistical jugglery, the President also said India’s gross domestic product (GDP) is growing at 7.4 per cent, which makes the country the fastest growing large economy in the world.
These numbers will even flummox Arvind Subramanian, the chief economic advisor to the present government. Although both Subramanian and Reserve Bank of India governor Raghuram Rajan are unwilling to take a judgement call on the matter, they are rather unanimous in saying these numbers require further scrutiny. Manipulating data related to the growth in GDP figures for any given quarter by switching the base year of calculation cannot, however, hide indicators that point to continued slack.
The President’s view on the present dispensation’s land ordinance also leaves much to be desired. Although Centre “attaches paramount interest to safeguard” the interests of farmers affected by land acquisition, the President said it has “suitably refined” the previous Land Act to minimise certain procedural difficulties in acquiring land for “critical public projects”. Provisions in the ordinance, however, might suggest otherwise. Now that the mandatory consent clause has been removed for a vast swathe of projects, won’t farmers and others landowners be more vulnerable to land grabbing? If there is no need to assess the social impact of a particular class of infrastructure projects on landowners then on what basis would they be compensated? Hopefully any compensation provided would not solely be on the basis of market prices, which are readily susceptible to manipulation from the land mafia.
In an effort to protect the farmer, has the land acquisition ordinance ensured the farmer gets very little value for the land he sells? It remains to be seen whether this is true. It would be, however, unfair to ride roughshod over President Mukherjee’s Budget address, since he’s only reiterating the government’s position on the economy.
While staple foods like wheat and rice have witnessed a marginal rise in cost, the prices of pulses like masoor and arhar have reportedly soared by 30 per cent. Also, the prices of vegetables and fruits have risen by 20-50 per cent, barring a few exceptions. For example, onion prices have soared by 40 per cent and tomatoes by 33 per cent. Unlike the dramatic spikes witnessed during the erstwhile UPA regime, food inflation has taken a rather slow trajectory under the present government, steadily rising over a period of months. The effect, in both cases, is families are left with tighter household budgets with very little leg room for other essential purchases. This slow-burning inflation, some political commentators believe, is what resulted in the disaffection of Delhi’s poor with the BJP-led central government in the recent assembly elections.
The President also unfortunately dabbled in some statistical jugglery. Inflation rose marginally to 5.11 per cent in January from 4.96 per cent, as per the new base year for calculating prices, adding more weight for services like education and health. Although inflation has slowed sharply over the past year, it is still high when compared to most countries. The rate in our fellow BRIC nation South Africa is at 4.1 per cent, Philippines 2.4 per cent and Malaysia 1 per cent. Indulging in further statistical jugglery, the President also said India’s gross domestic product (GDP) is growing at 7.4 per cent, which makes the country the fastest growing large economy in the world.
These numbers will even flummox Arvind Subramanian, the chief economic advisor to the present government. Although both Subramanian and Reserve Bank of India governor Raghuram Rajan are unwilling to take a judgement call on the matter, they are rather unanimous in saying these numbers require further scrutiny. Manipulating data related to the growth in GDP figures for any given quarter by switching the base year of calculation cannot, however, hide indicators that point to continued slack.
The President’s view on the present dispensation’s land ordinance also leaves much to be desired. Although Centre “attaches paramount interest to safeguard” the interests of farmers affected by land acquisition, the President said it has “suitably refined” the previous Land Act to minimise certain procedural difficulties in acquiring land for “critical public projects”. Provisions in the ordinance, however, might suggest otherwise. Now that the mandatory consent clause has been removed for a vast swathe of projects, won’t farmers and others landowners be more vulnerable to land grabbing? If there is no need to assess the social impact of a particular class of infrastructure projects on landowners then on what basis would they be compensated? Hopefully any compensation provided would not solely be on the basis of market prices, which are readily susceptible to manipulation from the land mafia.
In an effort to protect the farmer, has the land acquisition ordinance ensured the farmer gets very little value for the land he sells? It remains to be seen whether this is true. It would be, however, unfair to ride roughshod over President Mukherjee’s Budget address, since he’s only reiterating the government’s position on the economy.
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