(1888PressRelease)
March 03, 2007 - New Delhi, 2nd March, 2007. - It ignored the rural masses who were suffering because of adverse terms of trade for agriculture which was forcing the farmers to commit suicide as they were unable to meet the cost of inputs not to speak of getting adequate return for the hard labour put in by them.
The UPA was voted to power by making a commitment that they will look after the common man. A time has come when they should be reminded about their promises. The biggest setback received by the country has been raising inflation, which has made life difficult for all with maximum impact on urban masses. This got reflected in recent polls in Punjab and Uttranchal Pradesh, where urban electorate voted with vengeance to revive the BJP and teach Congress a lesson.
This lesson should act as warning for the Government, because growth by itself is not enough it has to be spread to all sections of society. A situation in which a small section in urban areas pockets all gains of growth will not be acceptable to masses in general. The youth in small towns, farmers in villages and middle class in metro cities also have to get the benefits of growth. These sections instead of improving have been further hit by growing inflation.
An inflation rate of above 6 per cent in wholesale prices has hit the urban masses hard while farmers have heard a lot about economic measures like loans, insurance covers and other benefits but the delivery system has not allowed these benefits to reach those who need the maximum. The result is that the ruling party is losing the confidence of middle class in urban areas as well as poor sections in rural areas.
The Finance Minister has tried to tackle the problem by giving huge hikes in budgets for agricultural sectors, secondary level education and road building, but the problems of delivery remain unattended. The result is stagnation in agricultural production and this cannot be compensated irrespective of the growth achieved in services sector and industrial sectors. The writing on the wall is clear but problems have not been attended to with the result that there is real danger that our growth story may end in a sorry note by becoming an overheated economy where inflation becomes an essential part of our life.
Such a situation would create more conflicts within the society as shining malls filled with luxury goods on one hand and high standards of consumption may create a wrong impression, but they will not be able to hide the hunger and squalor in our backyards that is small towns and villages where majority of people live. The growth in recent years owes a lot to low rates of interest, which enabled industry to grow, but in a heated economy where inflation and growth run close to each other the rates of interest will rise as is happening and before we know the growth engines will stop kicking. Industry and services can grow provided we get enough backing from rural sector in terms of adequate amount of food-grains, pulses and edible oil to feed the masses. If food production remains stagnant, all other sectors will also suffer as inflation will hike cost and pull the economy down. There are no free lunches and without a second agricultural revolution the growth story will turn sluggish in very near future.
The present Government has used many monetary measures to check inflation but in an economy where there are shortages no system can work.
As long the gap between the supply and demand was missing, the country could absorb lot of foreign investment and also gave a boost to our exporters which could compete in international markets and push our economy forward. This will not happen with the change in basics of our economy.
The questions that need to be answered include the basic like sluggishness in agriculture, is it temporary or permanent and how it can be turned around. Mere imposition of controls, tackling hoarding and building public distribution can help in limited way if the shortage is marginal, but if this continues to grow, it will do some serious damage to economy. Agricultural surpluses are essential for growth of country is accepted by all but no serious attempt has been made to resolve this problem.
The recent setbacks have forced the Government to abandon all economic reforms and increase outlays in agriculture, education and health but to utilize these resources will not be easy as delivery system remains as poor as before. Are we heading for another spell of growth or failure will be determined by the lessons learnt by present rulers. The Finance Ministers' budget, however, lacks the vision and boldness to face the challenge.
The midterm polls have given a warning and if ruling coalition ignores it, they will have to pay a price for it as people in India know how to exercise their right when time for voting comes by giving a decisive verdict.
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