Populist directives and the fiscal deficit

Populist directives and the fiscal deficit
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First Published: Tue, Feb 17 2009. 11 17 PM IST
Updated: Tue, Feb 17 2009. 11 17 PM IST
With reference to “India: a rising tide of red ink” (Mint, 17 February), I agree with your observation that the next government will have a tough time with the fiscal deficit. It’s ironic that despite having economists such as Manmohan Singh at its helm and the economy booming for almost three-and-a-half years of its five-year tenure, the government couldn’t do much about the deficit. You rightly point out that it was politics which won, and sadly economics lost, thanks to the populist measures under Sonia Gandhi’s directive. It’s not that such measures shouldn’t be taken, but it doesn’t make sense to spend everything at once. Hopefully, the next government will have its priorities right, though it won’t have the privilege of lots of ammunition at its disposal.
— Bal Govind
I wish articles such as this excellent piece (“The false logic of rate cuts”, Mint, 17 February) commanded more attention in the mainstream media. The comment, “Pushing interest rates to extremely low levels and keeping them there for a long time reinforces the tendencies the cuts aimed to reverse” is a bit broad in my humble opinion though.
What about stating that not only does it punish conservative savers (which it did), but it also encourages speculation (on a wide scale)—especially in the stock markets. Most home owners in the US did not participate in the housing “bubble”, which was in fact housing speculation coupled with fraudulent lending standards and near-absent regulation of the markets and lenders. These “responsible” home owners and savers are in fact taxpayers with remaining resources—resources which the government wants to take from them through taxation to help bail out financial miscreants.
It’s time to stop rewarding the gamblers (speculators) and... (the politicians) with our kid’s lunch money.
— Micheal Cortez
Regarding your editorial, “A spectacular self-goal”, (Mint, 16 February), because domestic demand for petrol is strongly price-inelastic and hence highly inflationary, subsidy was inescapable. RBI could have arrested the sharp fall in the rupee through aggressive early intervention and thereby lowered the price of imports to help contain inflation. Measures taken to boost the rural sector are not just for garnering votes but also for addressing the needs of the vast majority of the population. Continued neglect or token responses can have grave consequences for stability and can fuel insurgency in the country. Under the circumstances, some fiscal liberty is essential for long-term survival and growth. Hopefully, sooner than later, “soaring tax revenues” will become the norm as rising rural incomes fall into the widening tax net.
— Buddha Bagai
Your article “Once-prosperous silk centre in a sorry state” (Mint, 16 February) is a distressing read. The fact that the “absolute number of poor people doesn’t ever come down, though poverty, as a percentage of national population, declines”, may give solace to economists, statisticians and politicians, but it’s a serious blot on the nation. It’s painful to note that Maharashtra is the worst in urban poverty. Where have all the taxes generated in Mumbai gone? The parties that have ruled the state owe an explanation to the people.
In a way, coming on the eve of the general election, the ISI report is a godsend. The public-spirited among the youth and the middle class throughout the country would do well to deeply analyse the report, bring the glaring disparities to the notice of the people and create a public awareness for electing candidates who can ensure that development efforts reach all sections of the people and regions.
— S. Subramanyan
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First Published: Tue, Feb 17 2009. 11 17 PM IST
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