The absent policymaker4 min read . Updated: 17 Jan 2010, 08:32 PM IST
The absent policymaker
The absent policymaker
Important news items in the last two weeks have been about the price rise and the good industrial production numbers, but very little on the policy front. There has been little progress on any resolution about petroleum pricing or about the goods and services tax (GST).
Newspapers are gradually starting to comment about the absence of ministers at cabinet meetings, about decisions pending for long, and about the surface transport minister telling the Planning Commission to plan and not to intervene in the activities of the ministry. One gets a feeling of drift.
There are three areas which give particular cause for concern. The first is, of course, the inflationary pressure. It is now clear that the government could have acted much faster with measures outlined last week to increase availability of certain food items, and could have intervened with releases from stocks as well as de-hoarding operations much earlier. It is still true that a substantial part of the price rise is due to overstocking by private players and that the farmer is still getting paid only what the minimum support price mandates.
It is evident from the sugar cane pricing controversy that even what the farmers of Uttar Pradesh (UP) demanded as a reasonable price cannot account for the retail price of Rs55 per kg prevailing now—a clear case of some supernormal profits that are being made along the chain, which the government has been reluctant to act against.
Farmers are happy this year, but a share of the price increase is going into non-farmer pockets—a fact that farmers are likely to realize very soon. Thus, if not managed carefully, we will see a dual pressure on the government from producers and consumers alike soon— only because the middlemen are not being controlled.
Second, it is also becoming clearer, particularly after the recent UP state elections, that government schemes are having a limited impact. The National Rural Employment Guarantee Scheme has been an excellent programme—it was the sole saviour of the rural landless poor during last year’s drought—but there is slow and gradual realization that this programme does not address livelihood concerns, and that the youth are not going to be contained in the villages by these doles.
We have the chief minister of Delhi expressing concern about growing migration and cities have started bursting at the seams. And all because a lot of ideas—development of agriculture, creation of skill development programmes, revitalizing the manufacturing sector—are still lying at a conceptual stage and not getting converted into action.
These failures will come back to haunt this government in the next couple of years. In fact, in terms of policy decisions, there has been very little from any of the ministries, whether in mining, pharmaceuticals or industrial policy. There have been zero initiatives in the last six months, for reasons that are difficult to understand.
Third, there is so much learned comment on the rollback of the fiscal stimulus and the impact of high and low interest rates that it is difficult to see what the government is going to do—a case of too many experts. This has stalled the GST discussions, the third-generation (3G) spectrum auction, the disinvestment of shares from public sector entities, the reforms in the banking and insurance sectors as well as financial market regulations.
A lot of these decisions are held up by interested parties but, interestingly, there are so many such parties now that almost all decisions are held up!
On the positive side, there are some ministries that are going about their work seriously. The home ministry is certainly a different place than earlier, and the surface transport ministry is actually likely to see the roads programme sped up. Some other infrastructure ministries are also coming out of stupor, but the picture is quite patchy overall.
The real worry is that the world is not standing still and is moving at a frenetic pace—often driven by actions from China and reactions from the US—and we appear to be spectators on the scene.
The implicit comment by the US about the G2, as well as the statement that the US does not seek to be the leader in the world—made last month in Japan—are clear indications that the balance of commercial and economic power is fast changing.
We need foresight and strategy to devise a role for our country in these fast changing times. But I do not see anyone in the government in charge of long-term strategy, neither are there any reasoned commentaries in the media. Perhaps we have lost the habit of thinking long term.
Meanwhile, of course, all our companies have taken out their woollies to rah-rah about India at Davos, Switzerland, as usual.
S. Narayan is a former finance secretary and economic adviser to the prime minister. We welcome your comments at email@example.com