An issue not adequately addressed but staring us in the face is whether there are powerful vested interests working at failure of financial and economic policy implementation by providing the funding, the mechanics and the media coverage.
Many instances come to mind which show that there are strong reverse currents at work. Let us take some examples:
1. The 3 Farm laws that stood withdrawn. The Opposition to the same came from Punjab, Haryana and some parts of Western Uttar
Pradesh. This was the epi-centre of the protests. The rest of the
country was largely quiet, though attempts were made to start
agitations which mainly did not succeed.
Let us now focus on the final outcome of the agitation. The agitation is now ongoing in Punjab against the AAP government in power now. The Haryana and Delhi governments which encouraged the agitation have been defeated. The farmers of Punjab are fighting the AAP government in Punjab and the farm sector is not in anyone’s mind any more.
The average Indian tax payer feels that the farmer is a pampered species with no income tax, subsidies on utilities like electric power and water, unwilling to improve farm techniques and big farmers combined with activists / NGOs ensure that improved seeds are not used to get better output per acre. Agriculture which was about 35-40% of GDP four decades back is just 16-18% of GDP and is the forgotten economic activity. During elections in some states, they are remembered and quickly forgotten thereafter. No one is bothered and no one cares about them, though they still manage to extract benefits. However, India’s agriculture is in a continuous state of decline and the tax paying Indian citizen couldn’t care less.
2. Implementation of Labour Codes – It is a known fact that the various state governments (BJP and non-BJP) are not co-operating in implementing the new Labour Codes passed by Parliament by
delaying the Rules & Regulations, Procedural aspects, etc.
We are aware that strong political and trade union forces are against the successful rollout of the Labour Codes. Finally, who has gained by not making ‘ease of business’ succeed. Employment in the organized sector is stagnant with no great increase. India does not have greenfield projects of the size and numbers required if we need to increase manufacturing output and industrial employment. States which are most opposed to the Labour Codes are facing serious employment issues and are ‘exporting’ labour to other states. China is smirking and laughing at our inability to get manufacturing sector basics in control.
3. Public sector Enterprises – It must be stated that the current NDA
government has hugely succeeded in saving and expanding the
public sector banks through mergers, capital infusions and less political meddling in commercial decisions. We are aware that banks unions had opposed the mergers process. Now they understand how their jobs were saved.
However, the same tactics don’t seem to be working for other public sector units. Public sector insurance enterprises (4 entities) are ripe for mergers with the lead entity being New India Assurance. For some reason this merger plan does not seem to be thought of for insurance. In fact the insurance trade unions are now asking for speedy merger of all 4 entities. At least India will have one large public sector enterprise in general insurance space. In my view, a strong public sector presence in core economic sectors is necessary. Steel, Defence, Railways and Transport etc Ministries have multiple public sector enterprises under them. Don’t know how seriously mergers to build large public sector enterprises are being worked on.
Just as we have the IAS for running the Bureaucracy, the IRS for running the Tax services, the IFS for external diplomacy across countries, we need the IMS (Indian Management Service) for public sector units. It has been seen that Corporate management is different from implementing Government programmes in the field and requires different skill sets.
The IMS has to make out the skills sets requirements for public sector enterprises and then the entrants into the IMS are trained the way IAS/IRS /IFS candidates are trained. Building a trained management cadre to run our public sector enterprises is absolutely crucial. It is expected that the IMS will face opposition from IAS and IRS bodies, but to save the public sector we need to commence this at the earliest.
SUMMATION – Vested interests intent on securing Failure
In the case of agriculture, large farmers (with guaranteed pricing) and powerful lobby of middlemen has stymied the intent of the Farm Laws to create a pan India market.
In the case of Labour codes, strong political and trade unions lobby have neglected the ability to increase industrial employment and reduce employment pressure on agriculture. Also, it is my view that there is a lobby of industrialists wanting to create obstacles because their competence is in ‘managing’ bureaucracy and not business.
In the case of public sector enterprises, if India cannot get juice out of them – they will be a burden. Budget receipts will go into the blackhole of public sector inefficiency and instead of serving the purpose of checking private sector greed thru rapacious pricing, they will divert money from infrastructure, defence and social sector spendings. The political, business and bureaucratic class would love to see the public sector fail. Their milking goes unnoticed.
If we cannot get these three main sectors into order and contributing
significantly to India GDP, we are headed for a crash in the next 10 years. We would do well to heed the warning that an economy cannot grow and progress with in-equity in direct tax laws, boulders placed on the pathway on employment generation and an inefficient/non-contributory public sector. Vested interests intent on securing FAILURE must be defeated.
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