It’s nice to hear voices singing a different tune. Once a chief economic adviser, Dr. Arvind Subramanian is currently a senior fellow at Brown University’s Watson Institute for International and Public Affairs. He has excellent academic credentials and is a prolific writer. In an article in Foreign Affairs in December, Dr Subramanian criticized the government’s economic policies under the slogan Atmanirbhar Bharat.
Dr. Subramanian’s three main concerns are subsidies, protectionism and the rejection of regional trade agreements. His other concerns include questionable data, anti-federalism, majoritarianism and the weakening of independent institutions. He unwittingly disclosed his reasons for leaving the government in 2018 after almost four years when the government was happy to continue with him. He wasn’t happy and maybe expected things to get worse.
Things have indeed gotten worse. The average tariff which was around 12% under the UPA government has now risen to 18%. There is an indiscriminate use of safeguard duties, anti-dumping duties and non-tariff measures. India has withdrawn from multilateral trade agreements which would have greatly benefited the country. It is ironic that while Mr. Narendra Modi is keen on concluding multilateral politico-defense pacts (GSOMIA, COMCASA, QUAD, the second QUAD, RELOS), he is opposed to trade agreements.
Another former economic adviser is also disenchanted with Mr Modi’s economic policies. Dr. Arvind Panagariya is currently Professor of Economics at Columbia University and served as Vice President of Niti Aayog. In a recent article in The Economic Times, he sang the government’s praises but kept the sting in the tail. He wrote: “…he must open up the economy more widely through free trade agreements as well as reduce high fees, fix the higher education system by replacing the archaic University Grants Commission Act of 1956 with a modern law and broaden the bases of both and indirect taxes The privatization of UAPs must be accelerated and that of PSBs started.
Apart from the fact that Dr. Arvind Subramanian and Dr. Arvind Panagariya were government “insiders” until a few years ago, both are liberal economists, teach at reputable academic institutions and support the industry-led model. private. If they do not hesitate to identify the shortcomings of economic policies, they are reluctant to enumerate the disastrous consequences of such shortcomings.
Readers of this column know what the consequences were:
– fall in per capita income in a country with many poor people;
– increased malnutrition, stunting and wasting in children;
– slip from rank 94 to rank 104 (out of 116 countries) in the Global Hunger Index;
– millions of people pushed into poverty thanks to demonetization, weak support for MSMEs, refusal to transfer money to the poor and the mismanagement of the pandemic;
– high unemployment rate (urban 8.4%, rural 6.4%, CMIE);
– high inflation (CPI 5.6 percent);
– high indirect taxes and lenient direct taxes; Badly designed TPS;
– profits in the sale of petrol, diesel and LPG;
– return of the licence-permit system;
– emergence of monopolies;
– crony capitalism;
– drain of high-level business, engineering, medical and scientific talent.
While the people bear the economic cost of bad policies and their consequences, the Modi government has not yet been called upon to bear the political cost. In every other liberal democracy, the return home of millions of working poor without money, food or medicine; the shocking shortage of oxygen, hospital beds, medicine, ambulances and even space in crematoria and cemeteries; the uncertified and uncounted deaths of millions from Covid-19; the thousands of bodies left floating on the Ganges or abandoned on its banks; the ruthless neglect of the education of millions of children when schools were ordered to close; and the growing number of unemployed young people, would have jeopardized the survival of the government. Here the government continues nonchalantly, stifling debate in Parliament,
pursues Luddite politics and dazzles the people with state-sponsored religious spectacles.
Meanwhile, inequality increases, along with inequity and injustice. The Global Inequality Report 2022 by L Chancel, T Piketty et al estimated that the top 10% of India’s adult population collect 57% of national income and the bottom 50% only 13%. The richest 1% receives 22% of the national income. Oxfam’s report released last Sunday endorsed these grim findings and said the top 10% owned 77% of the country’s wealth. The number of Indian billionaires has increased from 102 to 142 while 84% of households have suffered a drop in income in 2021. The wealth of billionaires has increased from Rs 23.14 lakh crore in March 2020 to Rs 53.16 lakh crore in November 2021 while more than 4,60,000,000 fell into extreme poverty.
The budget (2022-23) is in a few days. It would be a tragedy if the government believed that it is coated in Teflon and does not need to change course. The threat of paying a political price is the only deterrent to an indifferent government.