Growth is antithetical to Congress party. Whenever it comes to power at Centre, growth goes back to negative rate. It is a Himalayan tragedy to handover the nation to such a party which is incapable of national governance. Proudly proclaiming that it had launched Indian into the global orbit of development is utter lie. Given the amount of natural resources of the nation, it should have progressed much better. But under the dynastic clutter it has gone down deeply. Even the majestic development initiatives like Golden Quadrilateral road building project initiated by the NDA government is rocked down by the UPA. It is mandatory to get rid of such a non performing out of the government.
N.V.Krishnakumar writes in The Times of India on 8 February 2013
Will the finance minister present a growth budget? Yesteryear election strategies of populism and debt write-offs are passe and are doubtful to be vote-getters in the 2014 general election. Issues that are likely to capture voter imagination in 21th century India are high economic growth, job creation, social and infrastructure development and poverty alleviation. Contrary to popular belief, the finance minister must present a budget for New India.
The government has made a good start this year by introducing the cash transfer scheme through Aadhaar, a much-needed efficient mechanism to deliver welfare benefits to the poor. The finance minister must follow it up by making some big bang announcements in the upcoming budget — purge unwanted ministries, slash subsidies, hasten disinvestment, streamline social programmes and show a political commitment to implement long-overdue reforms. Such pronouncements will stimulate investment, restore confidence in the currency, speed up long-term foreign inflows, bolster business sentiment and reinvigorate entrepreneurial animal spirits that can quickly reignite economic growth and create jobs.
Over the last five years, India`s economic growth has nosedived from over 8.5% to 5.5%. The fiscal deficit of central and state governments increased from 3.97% to 8.10% of GDP over the same period. The rupee depreciated more than 20% against the US dollar and nearly 50% against the Chinese renminbi. Household savings, as a percentage of GDP, have plummeted to a 21-year low. Stubbornly high inflation has constrained the RBI from reducing interest rates. Exports have been decelerating, thus widening the current account deficit. Amid weak economic data, profligate government spending on redistribution schemes and populist programmes has left a gaping hole in the budget.
In 2008, the year of the world financial crisis, government expenditure was at Rs 6.8 lakh crore while for the current fiscal year it stands at Rs 14.9 lakh crore. The doubling of expenditure has gone into supporting a bloated bureaucracy, wasteful subsidies, unnecessary government spending and hefty defence outlays that India can ill afford at this moment. In the name of inclusive growth, government disburses benefits generously to rich and poor alike. Subsidies are more than 2.5% of GDP and a third of the budget is spent on welfare schemes that are mostly pilfered.
If New Delhi has to get its house in order, it has to start downsizing government and move from social welfare to social development. For India to reap rich dividends from its demography it requires an educated, skilled and healthy workforce to compete in a global eco-nomy. A manifold increase in funding for education and health coupled with a copious reduction in expenditure, subsidies and welfare are the need of the hour.
Trimming down expenditure has to start with the abolition of redundant ministries that are relics of a bygone era. Sell Air India, privatise airports and the civil aviation ministry can be eliminated. Free diesel, kerosene and LPG prices and the petroleum ministry can be shut down. Privatise coal operations and the coal ministry could be done away with. Divest stakes in all steel companies and the steel ministry would become unnecessary as would the mines ministry.
The power ministry has been the biggest hindrance to India becoming a preferred destination for manufacturing. Free power is given to vested interests while theft is rampant, costing genuine consumers and causing businesses to pay an extraordinary price to secure electricity. Together with the state electricity boards, the central government must exit the power sector and do away with the power ministry.
Despite being politically sensitive, price controls in agriculture commodities must be abo-lished followed by the killing of the agriculture ministry. Agri exports were worth more than $37 billion last year, with India becoming the largest rice exporter following the government`s decision to lift a four-year ban. Indian farmers cannot prosper under the stifling diktats of a capricious ministry.
Once ministries are abolished, a roadmap can be established to end politically unpalatable subsidies — like for fertiliser and food — and subject them to economic fundamentals. The government must also move quickly to bring all of the poor under cash transfer schemes and scrap the 147 centrally sponsored social schemes that have not achieved desired outcomes over the years.
Many of the welfare programmes are geared towards political patronage and need to be cleansed. Cash granted for numerous schemes named after the Nehru-Gandhi family and the prime minister`s office has seldom been used for the allocated purpose. The flagship MGNREGA set up to create productive assets has rarely done so. A recent RTI query revealed that more than Rs 30 crore a year is being spent on the birth and death anniversaries of former prime ministers Indira Gandhi and Rajiv Gandhi. Eliminating poorly designed and badly implemented welfare schemes, dropping programmes that state governments duplicate, and rationalising expenses can go a long way in consolidating government finances.
It is time for a shock and awe budget. It is time to banish Nehruvian era ministries from the annals of Indian politics, divest PSUs, fund social and infrastructure development, restructure welfare, and accelerate the implementation of reforms that can catapult India back to 9% economic growth. This is also the best political strategy to position the Congress and the UPA for a third consecutive term.