People's Democracy

PM’s Independence Day Address

Need for Alternative Policy Trajectory Reconfirmed

DR MANMOHAN Singh delivered his tenth consecutive customary address by the prime minister on the occasion of our Independence Day from the ramparts of the Red Fort. This would be his last address as the prime minister of this UPA-2 government as the general elections are scheduled to be held before the 2014 Independence Day.

Under these circumstances, the prime minister’s address to the nation was a list of so-called achievements of his government and, thus, laying the basis for an election campaign blueprint for 2014. It is apparent that the main claim to fame that this government will seek in the election campaign is the Food Security Bill which PM claims, “is the largest effort of its kind in the whole world”. We have repeatedly articulated in this column that the present Bill is far from adequate in providing meaningful food security for our people. We have moved concrete amendments to the Bill when it comes up for discussion in the parliament aimed at giving a meaningful food security for all our people. Further, the UPA-2 had promised such a legal food security entitlement during the first 100 days following its assumption to office. A 100 days have passed by, 15 times since this promise was made and, yet, there is no legislation in place.

In this vein, PM has put forward a new theory of a decadal growth and development pattern of independent India. Beginning with the decades under the leadership of Jawaharlal Nehru, through the decades under the leadership of Indira Gandhi, Rajiv Gandhi and Narasimha Rao (of course, only Congress party prime ministers!), he carries the thread through to the last decade under his stewardship. This is what he says, “I believe that the last decade has also been a decade of major changes in the history of our nation. In no other decade has our economic development increased as much as in this decade. Democratic forces have been strengthened and many sections of our society have joined the mainstream of development for the first time. The common man has been given new rights which have led to his social and economic empowerment.”

The major basis for such bombastic claims is the high levels of GDP growth rate: “In the last 9 years, our economy has grown at an annual average rate of 7.9 percent. This pace of development is the highest in any decade so far.

Of course, there is no mention of the fact that this growth trajectory during the last decade has, in effect, created the emergence of two Indias with the hiatus between them constantly widening. In a manner of countering this reality, the prime minister makes yet another bombastic claim on the declining levels of poverty in our country. He says, “Measuring poverty is a difficult task. There are diverse views about what constitutes poverty. But whatever definition we may adopt, it cannot be denied that the pace of reduction in poverty has increased after 2004.”

We have repeatedly shown in these columns the absurdity of such claims. Utsa Patnaik (People’s Democracy, Economic Notes, August 05-11, 2013) pointed out very pertinently: By 2009-10 after meeting all essential non-food expenses (manufactured necessities, utilities, rent, transport, health, education) 75.5 per cent of rural persons could not consume enough food to give 2200 calories per day, while similarly 73 per cent of all urban persons could not access 2100 calories per day. The comparable percentages for 2004-5 were 69.5 rural and 64.5 urban, so there has been substantial poverty rise. Once the NSS releases its nutritional intake data for 2011-12 we can see the change up to that year, but given the high rate of inflation and sluggish job growth, the situation is likely to be as bad, if not worse. Our figures are obtained by applying the Planning Commission’s own original definition of poverty line. Against a background of rapidly rising cost of privatised health care, education and utilities (electricity, petrol, gas) combined with high food price inflation and exclusion of the majority of the actually poor from affordable PDS grain, it is hardly surprising that the bulk of the population is getting more impoverished, and its nutritional level is declining faster than before.

The Food and Agriculture Organisation (FAO) estimates that 22 per cent of India’s population is undernourished. The UNICEF estimated that India was home to 42 per cent of the developing world’s children who are underweight due to malnutrition. In fact, not very long ago, the prime minister himself bemoaned the persistence of high levels of malnutrition particularly amongst our children and described this situation as a “national shame”. Yet today, he makes such bombastic claims.

Surprisingly, the prime minister notes that the performance of the agricultural sector is fairly satisfactory. He gloats by saying, “Our foodgrain production reached a record level of 25.9 crore ton in 2011-12”. Further he says, “In the last 9 years, support prices for various crops have been enhanced as never before. The support prices for wheat and paddy have been more than doubled.” On this very score, recollect what the union minister for agriculture had to say: In answer to a question in the Rajya Sabha on November 30, 2012 regarding rise in cost of production, the union agricultural minister, on the basis of the data provided by the Commission for Agricultural Costs and Prices, informed the parliament that between 2010-11 and 2011-12, the cost of production per quintal of paddy went up by Rs 146 but the minimum support price went up by only Rs 80. Likewise for wheat when the cost of production between 2011-12 and 2012-13 increased by Rs 171 per quintal, the Minimum Support Price was increased by only Rs 65. Thus, the government’s claim that it is providing the farmer a handsome support price is a sham.

Overall the agrarian sector in our country has not been able to achieve the targeted growth rate of 4 per cent in both the Tenth and Eleventh Five Year Plans. The state of agrarian distress had been well-documented in these columns in the past. The levels of acute misery in our rural areas are evident with the continuing spate of distress suicides by our farmers.

The entire thrust of the prime minister’s speech is that India can achieve a holistic development and vastly improve the prosperity levels of our people if we are able to maintain the trajectory of high economic growth rate. He says, “If in the future we can achieve the same kind of progress as in the last decade, the day is not far off when India will be rid of poverty, hunger, disease and ignorance. Our India will be prosperous and all its citizens will be equal partners in this prosperity, irrespective of their religion, caste, region or language.”

In a similar vein, he says, “As I have stated earlier also, rapid economic growth is an imperative for our country. Without it, we cannot possibly achieve targets such as removal of poverty, provision of good quality education and health services and creation of new employment opportunities. The average rate of economic growth that we have attained in the last 9 years shows what we are capable of. However, economic growth has slowed down at present and we are working hard to remedy the situation.”

And, what is the `remedy’? “To boost Foreign Direct Investment, we have recently enhanced the limit of such investment in many sectors and made its easier procedurally. In the coming months, we will see visible results of these efforts to increase investment. Our growth will accelerate, new employment opportunities will be generated and there will be improvements in the infrastructure sector.”

We have seen repeatedly in these columns in the past that no amount of investment will automatically lead to growth and create new employment opportunities unless there is adequate purchasing power in the hands of the people and, therefore, high levels of domestic demand to buy and consume what such investments may produce. Rather than concentrating on the expansion of domestic demand, the measures taken by this UPA-2 government has only been constantly reducing the levels of purchasing power amongst the people. The main factor contributing to a sharp decline in the disposable incomes of the people is this continuous rise in the prices of all essential commodities.

Despite all the concessions provided for the inflow of FDI, including the ones in the pipeline, the net FDI declined from $ 15.7 billion in 2011-12 to $ 12.8 billion in 2012-13. The persistence with such a strategy clearly shows that India under this government will continuously be providing greater avenues for foreign capital in its pursuit of profit maximisation, in the background of a global recession, at the expense of the Indian economy and the livelihood status of the Indian people.

What the country and the people need today is an alternative policy trajectory that can build on the innate potential of our country and our people to create a better India.

(August 15, 2013)