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Daunting challenges await UPA

Daunting challenges await UPA

Author: Shivaji Sarkar
Publication: The Pioneer
Date: May 19, 2009
URL: http://www.dailypioneer.com/177110/Daunting-challenges-await-UPA.html

The global economic crisis is nowhere near a solution and Western economies are becoming increasingly protectionist. The new Government will have to factor this in while charting India's course

The new Government, which is set to takeover amid difficult news of 2.3 per cent dip in industrial production and manufacturing sector contracting by 3.3 per cent, faces several daunting challenges ahead besides pepping up the industry.

It has to complete the semi-finished budgetary process, take steps to add to growth without levying taxes (rather it has to cut taxes), create jobs, protect the rights of the working class, boost agricultural and rural growth, reduce the number of poor, bring down the prices and ensure that the country's current investment grade rating risked by large deficits is maintained.

The new Government has to study how to remain integrated by insulating the domestic economy from the ills of reckless process of the Western economies, which had always been protectionist and now would be more so.

Economic concerns have to be addressed without compromising on either humanitarian issues or principles of good governance. The Government has to devise ways to effectively check corruption that proliferate more during difficult times.

The process for regeneration of the economy has to start with the presentation of the Budget, which will lay down the fundamentals of resuscitation. The February Budget has exposed the myth of the economy being in a proper shape. The finances, the Budget reveals, had started tottering long before the global meltdown - post-August 2008 Lehman Brother scam.

It is known that the Government has to complete the process post-haste to complete constitutional obligation. Would the Government be able to include its concerns in such a short period? It has also to contend with political and regional pulls and counter pulls as well. Various allies would have their concerns and amid such diversities, finalising a process has its own pitfalls.

The growth projections are continuously coming down. If the Reserve Bank of India and the Planning Commission are to be believed, it may hover around five per cent while international estimates push it down. The Government's concern will be to push it up by all means.

The breakdown in 1991 had provided a unique opportunity of shedding the burden of past notions and ideals. It ushered in a reform where the poor unfortunately took a back seat. Growth was seemingly there but there were not many jobs. Social welfare was not the concern. In the name of pension reforms, whatever little was available is being robbed of. Labour has been robbed of its minimum protection even at a time when corporate profits may have come down a bit, but they are nowhere in losses.

The 2009 Lok Sabha election has provided the Government with opportunities to integrate the labour into the policy making phenomenon. The Government has to ensure that workers' interests are protected and they are not robbed of what is promised to them. If corporate profits are sacrosanct, so are the minimum wages and benefits of the workers. A weakened labour force implies a weaker economy.

The fundamentals of 1991 have to be reset in 2009, giving economy a new meaning. It has to reorient rural periphery, agriculture, small-scale and cottage units, corporates and rural and urban work force.

A strong agriculture policy based on land policy, marketing, bank credit and innovation has to be introduced. During the past two decades, prime agricultural land use has been changed to industrial special economic zones, urbanisation, housing and road projects. It has to be stopped.

The country cannot afford to lose farm lands particularly at a time when it is less than the requirement. Farmers should be encouraged to retain their land holdings and not sell to the landsharks. With almost 60 crore people depending on agriculture, a policy for the farm sector is needed on priority basis.

Although welfare schemes like Jawahar Rojgar Yojana and NREGA are there, the very concept is based on giving doles. Rural and semi-urban people need to be integrated into the new economy rather than being given the doles.

The trickle-down theory has not worked. An independent policy is needed for the two-third of rural Indian and 70 per cent of urban workers who are not getting the officially stipulated minimum intake of 2,700 calories.

Leading index provider Standard & Poor has recently revealed that investment rating is downgrading and it may further because of rising deficits. The Government has to ensure a fast-paced growth by increasing purchasing capacity by empowering the working class. The 1991 economic reforms started an urban-centric policy and 2009 has to have a holistic look by including the forgotten and forsaken sectors. It has to pin for an inclusive growth.

India has the advantage of a young population that is to last till 2050. Even China is to lose the advantage owing to its one-child policy from 2015. The youth is spread all over. If these daunting challenges are taken care of recession cannot stop country's economic growth. It does not even need investment. Prudent inclusive thinking can help achieve this goal.

- The writer is a senior economic affairs journalist.

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