Speech by the Prime Minister for sacrifices and comparing the situation to 1991 ??

For the last few days, there were many reports in the press about the Prime Minister coming forward to address the nation about the reform movement, and given his history of being the main person behind the reform movement in 1991 (although it is missed that without the support of PV Narasimha Rao, he would not have gone anywhere), it was expected that he would try to stake a claim for the reformer persona. So, the speech took place, trying to portray that the country was in a tense situation economically, subsidies are going to drag Government finances down, and so on; and with post-speech support from the Congress blaming the allies for whatever slowdown there was in the reform area, it portrayed the Congress as the only one who could put things right.
All this would be so re-assuring to the citizens of the country, if not for the fact that the Government was in power for the last 8 years, and when they started, things were fine. But the basic nature of the Congress High Command was that of a socialist bent, and they have come in with the support of the Aam-admi, so the idea was to do things that would support the aam-admi and nothing else was required. So there was a series of populist measures for the Aam admi and the rural poor, such as the farmer loan waiver scheme, the Bharat Nirman effort, a renewed thrust on rural roads and development, and the rural poor income scheme, with incredible sums being proposed to be spent on such schemes. The calculation was that if these schemes are successful, they would have stoked a demand led growth from the rural poor and increased the development level of the country. We will talk about the success of these schemes a bit further down.

Now let us take the poor Prime Minister, even if he would have tried to do some reform or measures, he does not have the political support, so what can he do ? This is the argument that was reported in some sections of the media. The problem is, the country is at such a point that it needs political leaders who can lead and move forward; we cannot depend on people who are stuck because they do not have the courage to push for something that they themselves believes would have led to change. Now, the situation is that the country is almost sliding back into the a sub-5 % growth level, with an incredible level of pessimism. The pessimism level is so high that even a few policy statements by the Government (these recent reform measures are administrative decisions, they do not need new laws where they need to negotiate with allies for support) are enough to make people believe again. This is not a success of the Government, this is a sign of the pitiful state that the country has come down to.
Consider the case where the growth rate started to decline over the past 2-3 years. The Government had 2 utterances – they patted themselves on the back about having come out of the global economic draw-down through their superior policies, and on the other hand, as the growth rate continued to drop, the Government blamed global factors and also tried to get people to believe in their policies which will eventually cause a drop in the inflation level and an increase in the growth rate. However, as the Government continued to keep on making statements about their getting the growth rate up again, the belief in such statements without any concrete action reduced and people started to get much more critical of the Government. And then the Government blamed all this on Pranab Mukherjee, so that when he became President, everything would become right again.
However, his appointment as the President came, and yet nothing happened. But why did the Government suddenly become inspired ? I continue to believe that it was the recent spate of articles (more in the foreign press, and increasing in the domestic press) that grew increasing harsh of the Prime Minister and also started to analyse the abilities of the crown prince. If Rahul Gandhi’s reputation was being shred to tatters in the media, this was actually critical for the Congress, not an economic situation which was apparent even a couple of years back.
Now, onto the measures undertaken by the Government.
The loan waiver was something that was expected to address the problems faced by poor farmers. But this was a short-gap measure. There are no infrastructural steps to address the problems faced by farmers, no effort to increase irrigation fed agriculture rather than depend on the rain gods. No steps to address the problem of rotting of produce, no cold storage additions, etc. Now, banks are hesitant to lend to farmers since there is a concept that these loans will get waived.
Bharat Nirman: The concept was that these would lead to an increased level of infrastructure all over the country, including basic infrastructure that has most cities in India bursting at the seams, facing problems of sewage, water shortages, transport issues and so on. Recently, the Government admitted that the targets of Bharat Nirman would not be met, and it seems that the Government did not put the effort to ensure that these programs were being implemented.
Rural roads: This was a step that was started by the NDA Government and has the potential to increase the rural infrastructure level incredibly. However, this is one of the failures of the Government, with the rate of growth in both highways and rural roads totally down, not matching earlier levels of these implementations, and with a change in ministers and even with the NHAI having remained headless over a period of time, it was clear that the Government was not really serious about this essential development.
Rural jobs program: This is one of the measures that even wins support from economists who otherwise look askance at Government led populist programs. However, there is a flip side to this. Even when the program was being implemented, there were multiple appeals to implement an accountability step in the entire process, a social audit. That has not happened, and the stories of multiple diversions from the program at each and every step are now legion. Any audit done at any level reveals problems; when social activists start investigating, many of them are attacked and some are even killed, and yet the Government does not try to incorporate any kind of audit step in these huge finance programs.
And then there are the coal, 2G, and multiple other scams. The common thread in all of these is the level of corruption is incredible. In the scams, investigations at any level reveal incredible levels of corruption, funds diversion at unprecedented levels, and with no discernible steps taken by the Government to stop these.
If the Government really wants to do reform and regain the support of people, it should attack these levels of corruption, and the amount of funds that could be available would be enough to re-start the economy. However, one knows that the Government will not take these steps, will not stop the corruption that starts from the top down level, and it is only independent agencies (such as CAG, Supreme Court, etc) that can cause the level of public outrage that would cause the Government to stop and reevaluate its policies.

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