UPA’S CRISIS
The Manmohan Singh government has lost its reformist instincts and permitted mega loot of the country.
London: The growing repudiation of the United Progressive Alliance regime began with dismay at its ruinous economic policies, caused by unremitting financial profligacy and scandalous corruption, which has enveloped the country at every level. Deepening national disenchantment was accompanied subsequently by widespread conviction that Narendra Modi’s success in Gujarat and record of good governance might surmount the calamity overtaking the country under the tutelage of 10 Janpath and a prime minister failing to uphold his oath of office. Finally, the cynical readiness of the UPA to barter the country’s paramount security interests by dismantling any national institution, in disgraceful subterfuges to cling to power, has reinforced the rationale for its peremptory eviction from office. Some of its most senior ministers now rightly fear for their personal fate should they cease to wield power after 2014.
The high hopes for the Indian economy of the 1990s that endured until 2008 have mostly been shattered in the past few years of UPA rule. India is facing yet another foreign exchange crisis that threatens major economic derailment. The trade deficit exceeds 12 per cent of GDP and inflation, precipitated by atrocious fiscal profligacy, is enforcing a painful balance of payments correction. Massive government borrowing is also ‘crowding out’ private investment. The Kelkar Committee worries the fiscal deficit debacle for 2012-2013 may reach 6.1 per cent which, combined with state budget deficits, is even higher. In any event, these figures are habitually manipulated downwards by excluding additional leakages, for example, suffered by energy producers due to subsidised fuel sales. Yet, few Indian politicians seem to discern an associated peril that historically correlates chronic fiscal distress with vulnerability to military catastrophe and political disaster.
The trifling current fall in the fiscal deficit, at present, owing to higher tax revenues, is unlikely to be sustained because of already announced bountiful giveaways. At any rate, reconciling this unlikely conundrum depends on the reliability of the expected growth figures announced by the Union finance ministry which are likely to prove exaggerated and actually fall below 5 per cent. The lofty certainty that growth would sustain higher spending, however misguided and wasteful, an idea promoted by exceedingly influential economist Jean Dreze, has proved unfounded, which even a mediocre macroeconomic model would have anticipated. The feverish reliance on volatile short-term currency flows that is staving off an immediate balance of payments denouement, the prelude to major economic setback, will not last. The familiar squeeze on domestic consumption that is the unerring prescription of Bretton Woods’ institutions to foreign exchange crisis seems to be in prospect.
In this context, the remedy to India’s ills, according to shameless UPA ministers, is apparently to be found in Washington, New York and, presumably, Cambridge, Massachusetts. Indian ministers have run cap in hand to pay obeisance to the same corrupt financial institutions that have engaged in historically unprecedented robbery and almost destroyed the world economy in the bargain. The soaring death rates among the world’s poor are directly attributable to their criminal activities. Their commodity speculation, prompting food prices to rocket, has been a critical factor in the revolutionary political and social upheavals in many parts of the world. Yet the supposed Socratic oracle from Cambridge, Massachusetts, has no compunction in alarmist hyperbole about 1,000 weekly deaths in support of India’s absurd Food Security Bill. He is wilfully ignoring evidence that it cannot address nutritional deficits among the poor and will be impossible to implement because the government does not possess the requisite administrative capacity. The allegedly communal Narendra Modi constitutes such a dire threat to civilization itself that misusing one’s reputation for a spot of nauseating electioneering is apparently perfectly acceptable.
The intellectual reputation of Amartya Sen among economists rests on the unexamined presumption that philosophers have high regard for him since he does in fact occupy a chair in Philosophy at Harvard, while philosophy dons assume he is a major economist. Ironically, neither now takes him seriously as one of their own. His acolytes, including Manmohan Singh, and students have had a major role in India’s economic policy in recent years, most particularly Jean Dreze, whose father was on the Nobel committee that awarded Amartya Sen the prize. Jean Dreze’s role has been particularly ruinous since he has been in a position to by-pass India’s established channels of policy-making and scrutiny because of his extraordinary proximity to 10 Janpath. Dreze long ceased to offer serious economic arguments and speaks openly of empowering the poor, pursuing his own private agenda by influencing Sonia’s Gandhi’s National Advisory Council. It really is a body of no greater solidity than an undergraduate student union, with Dreze as hyperactive general secretary, though he has since departed from it and manipulates discreetly. Dreze’s concern for India’s poor echoes a long established tradition of evangelists trying to save them from India’s indifferent elites. It is known that Amartya Sen was privately opposed to NREGA but said nothing in public. One is hard pressed to find a thoughtful appraisal by Amartya Sen of the performance of the UPA government that he clearly wishes re-elected despite its record for scandalous corruption and utter mismanagement. Apparently, all judgement and criticism have to be suspended because of its presumed secular credentials, but he is in good company, since Laloo Prasad Yadav is also a defender of its corollary, Europe’s eighteenth century Enlightenment.
Amartya Sen has begun writing popular books, best suited for a swift skimming in airports lounges, on a somewhat overwrought scale, which reminds of the late Jyotindra Nath Dixit’s embarrassing and not very memorable output after retirement as foreign secretary. Sen covers the entire gamut of public issues with little reflection or research, much like a run-of-the-mill newspaper columnist. Some of the stuff is rousing but barely constitutes substantive comment that any policymaker could entertain. He denounced India’s 1998 nuclear tests which surely deserved scrutiny since legitimate doubts could have been entertained, as they indeed were even among Atal Behari Vajpayee’s senior advisers. And it did indeed create an open the door for Pakistani terrorism. However, in retrospect, Atal Behari Vajpayee made the right decision though, as the thoughtful man he was, Vajpayee did not consider the case in favour of the test unassailable. I was taken aback once to be asked by him, to paraphrase, if I did not think it was in the national interest since someone evidently mentioned my reservations to him. I had replied hastily that as an academic I had the luxury to doubt and he had done what he had to do as prime minister! But who does Amartya Sen quote to censure India’s nuclear tests, without any mention of China’s huge nuclear weapons’ arsenal? Praful Bidwai and Achin Vanaik, whose fulminations on the subject are motivated by hard left anti-national bile and little else besides.
The recent controversy over Amartya Sen’s perfectly legitimate political sentiments has muddied the waters unnecessarily and prevents a rounded judgement of his role and achievements. Without doubt, anyone who has sat through his lectures will recall his brilliance, clarity and his oratorical skills. He surely deserved the ‘Nobel prize’, the Sveriges Riskbank Prize in Economic Sciences in Memory of Alfred Nobel to be accurate, as well as the Bharat Ratna. But denial that any lobbying took place for either stretches credibility since that is exactly what occurs for both and candidates always argue their case for the Bharat Ratna with the relevant authorities. Amartya Sen’s important contribution to economics took place in the late 1950s and his work on famine though creating an important debate on the subject, with welcome practical policy implications, is not regarded as a major analytical breakthrough by professional economists. His contention that famines never occur in democracies is typical of the hyperbole that seems to have overtaken considered reflection since famines are an ancient phenomenon and democracy is relatively new and also accompanied by industrial transformation that created the ability to combat famines. It really has been a case of successful salesmanship of an interesting idea that created an aura of Newtonian achievement around it. Jagdish Bhagwati who has become the unwitting whipping boy by default for Sen’s fans is viewed by professionals as the superior economist and has been proven right on the fundamental role of openness to trade in economic development. It is a reputation for poor social skills that was the major reason for his lack of recognition through the Nobel. The silky and charming Amartya Sen was always the favourite after which deserving Indians ceased to be eligible, but he cannot claim the moral stature of a Bertrand Russell since he is a mere party political apologist which is fatal for integrity.
The UPA which Amartya Sen wishes to see re-elected has well and truly snatched defeat from the jaws of victory by behaving like the government of a banana republic. It is hard to believe that India enjoyed a higher per capital income at purchasing power parity than China in 1991 and lags behind dismally today. It has barely achieved US$ 3600 compared to China’s US$ 8300 though the per capita income of the latter was US$ 886 in 1991 with India at US$ 916. One critical reason for India’s profoundly disappointing comparative performance has been the failure to achieve analogous labour productivity growth. This failure is due to a number of factors, not least India’s notorious labour market inflexibility, which the failure to reform it perpetuates. Infrastructure development has also been mightily mismanaged, with an artless failure to rationalise environmental clearances and reach a consensus on property rights, because the UPA lacks the credibility and finesse to convince the country. Wayward policy coordination and implementation have meant that despite the installation of additional power generation capacity fuel shortages hinder operations. The scam over coal allotments has underlined the UPA’s real priorities, which is not to address the issue of power outages, but milk the country to the hilt.
The hoped for dividends of economic policy change in the 1990s, which the National Democratic Alliance had managed to keep somewhat alive in many areas, like road building, have been squandered without apology by the UPA. It has failed on virtually every front, with extortion and bribe-taking the principal substitutes for governance during the tenure of a prime minister whose alleged personal probity has become a mere cover for crime. Unfortunately for him, the public has understood that personal probity is not synonymous with moral integrity. In a recent article on the disarray of governance in India, Professor Bharat Karnad has warned of the likely calamity should the National Disaster Management Authority, staffed by worthless political appointees, be called upon to fulfil its remit and respond to the aftermath of a nuclear assault against an Indian city. This is what it has all come to. Serious reformist policy is beyond the capacity of the UPA, no matter how pressing.
The high hopes for the Indian economy of the 1990s that endured until 2008 have mostly been shattered in the past few years of UPA rule. India is facing yet another foreign exchange crisis that threatens major economic derailment. The trade deficit exceeds 12 per cent of GDP and inflation, precipitated by atrocious fiscal profligacy, is enforcing a painful balance of payments correction. Massive government borrowing is also ‘crowding out’ private investment. The Kelkar Committee worries the fiscal deficit debacle for 2012-2013 may reach 6.1 per cent which, combined with state budget deficits, is even higher. In any event, these figures are habitually manipulated downwards by excluding additional leakages, for example, suffered by energy producers due to subsidised fuel sales. Yet, few Indian politicians seem to discern an associated peril that historically correlates chronic fiscal distress with vulnerability to military catastrophe and political disaster.
The trifling current fall in the fiscal deficit, at present, owing to higher tax revenues, is unlikely to be sustained because of already announced bountiful giveaways. At any rate, reconciling this unlikely conundrum depends on the reliability of the expected growth figures announced by the Union finance ministry which are likely to prove exaggerated and actually fall below 5 per cent. The lofty certainty that growth would sustain higher spending, however misguided and wasteful, an idea promoted by exceedingly influential economist Jean Dreze, has proved unfounded, which even a mediocre macroeconomic model would have anticipated. The feverish reliance on volatile short-term currency flows that is staving off an immediate balance of payments denouement, the prelude to major economic setback, will not last. The familiar squeeze on domestic consumption that is the unerring prescription of Bretton Woods’ institutions to foreign exchange crisis seems to be in prospect.
In this context, the remedy to India’s ills, according to shameless UPA ministers, is apparently to be found in Washington, New York and, presumably, Cambridge, Massachusetts. Indian ministers have run cap in hand to pay obeisance to the same corrupt financial institutions that have engaged in historically unprecedented robbery and almost destroyed the world economy in the bargain. The soaring death rates among the world’s poor are directly attributable to their criminal activities. Their commodity speculation, prompting food prices to rocket, has been a critical factor in the revolutionary political and social upheavals in many parts of the world. Yet the supposed Socratic oracle from Cambridge, Massachusetts, has no compunction in alarmist hyperbole about 1,000 weekly deaths in support of India’s absurd Food Security Bill. He is wilfully ignoring evidence that it cannot address nutritional deficits among the poor and will be impossible to implement because the government does not possess the requisite administrative capacity. The allegedly communal Narendra Modi constitutes such a dire threat to civilization itself that misusing one’s reputation for a spot of nauseating electioneering is apparently perfectly acceptable.
The intellectual reputation of Amartya Sen among economists rests on the unexamined presumption that philosophers have high regard for him since he does in fact occupy a chair in Philosophy at Harvard, while philosophy dons assume he is a major economist. Ironically, neither now takes him seriously as one of their own. His acolytes, including Manmohan Singh, and students have had a major role in India’s economic policy in recent years, most particularly Jean Dreze, whose father was on the Nobel committee that awarded Amartya Sen the prize. Jean Dreze’s role has been particularly ruinous since he has been in a position to by-pass India’s established channels of policy-making and scrutiny because of his extraordinary proximity to 10 Janpath. Dreze long ceased to offer serious economic arguments and speaks openly of empowering the poor, pursuing his own private agenda by influencing Sonia’s Gandhi’s National Advisory Council. It really is a body of no greater solidity than an undergraduate student union, with Dreze as hyperactive general secretary, though he has since departed from it and manipulates discreetly. Dreze’s concern for India’s poor echoes a long established tradition of evangelists trying to save them from India’s indifferent elites. It is known that Amartya Sen was privately opposed to NREGA but said nothing in public. One is hard pressed to find a thoughtful appraisal by Amartya Sen of the performance of the UPA government that he clearly wishes re-elected despite its record for scandalous corruption and utter mismanagement. Apparently, all judgement and criticism have to be suspended because of its presumed secular credentials, but he is in good company, since Laloo Prasad Yadav is also a defender of its corollary, Europe’s eighteenth century Enlightenment.
Amartya Sen has begun writing popular books, best suited for a swift skimming in airports lounges, on a somewhat overwrought scale, which reminds of the late Jyotindra Nath Dixit’s embarrassing and not very memorable output after retirement as foreign secretary. Sen covers the entire gamut of public issues with little reflection or research, much like a run-of-the-mill newspaper columnist. Some of the stuff is rousing but barely constitutes substantive comment that any policymaker could entertain. He denounced India’s 1998 nuclear tests which surely deserved scrutiny since legitimate doubts could have been entertained, as they indeed were even among Atal Behari Vajpayee’s senior advisers. And it did indeed create an open the door for Pakistani terrorism. However, in retrospect, Atal Behari Vajpayee made the right decision though, as the thoughtful man he was, Vajpayee did not consider the case in favour of the test unassailable. I was taken aback once to be asked by him, to paraphrase, if I did not think it was in the national interest since someone evidently mentioned my reservations to him. I had replied hastily that as an academic I had the luxury to doubt and he had done what he had to do as prime minister! But who does Amartya Sen quote to censure India’s nuclear tests, without any mention of China’s huge nuclear weapons’ arsenal? Praful Bidwai and Achin Vanaik, whose fulminations on the subject are motivated by hard left anti-national bile and little else besides.
The recent controversy over Amartya Sen’s perfectly legitimate political sentiments has muddied the waters unnecessarily and prevents a rounded judgement of his role and achievements. Without doubt, anyone who has sat through his lectures will recall his brilliance, clarity and his oratorical skills. He surely deserved the ‘Nobel prize’, the Sveriges Riskbank Prize in Economic Sciences in Memory of Alfred Nobel to be accurate, as well as the Bharat Ratna. But denial that any lobbying took place for either stretches credibility since that is exactly what occurs for both and candidates always argue their case for the Bharat Ratna with the relevant authorities. Amartya Sen’s important contribution to economics took place in the late 1950s and his work on famine though creating an important debate on the subject, with welcome practical policy implications, is not regarded as a major analytical breakthrough by professional economists. His contention that famines never occur in democracies is typical of the hyperbole that seems to have overtaken considered reflection since famines are an ancient phenomenon and democracy is relatively new and also accompanied by industrial transformation that created the ability to combat famines. It really has been a case of successful salesmanship of an interesting idea that created an aura of Newtonian achievement around it. Jagdish Bhagwati who has become the unwitting whipping boy by default for Sen’s fans is viewed by professionals as the superior economist and has been proven right on the fundamental role of openness to trade in economic development. It is a reputation for poor social skills that was the major reason for his lack of recognition through the Nobel. The silky and charming Amartya Sen was always the favourite after which deserving Indians ceased to be eligible, but he cannot claim the moral stature of a Bertrand Russell since he is a mere party political apologist which is fatal for integrity.
The UPA which Amartya Sen wishes to see re-elected has well and truly snatched defeat from the jaws of victory by behaving like the government of a banana republic. It is hard to believe that India enjoyed a higher per capital income at purchasing power parity than China in 1991 and lags behind dismally today. It has barely achieved US$ 3600 compared to China’s US$ 8300 though the per capita income of the latter was US$ 886 in 1991 with India at US$ 916. One critical reason for India’s profoundly disappointing comparative performance has been the failure to achieve analogous labour productivity growth. This failure is due to a number of factors, not least India’s notorious labour market inflexibility, which the failure to reform it perpetuates. Infrastructure development has also been mightily mismanaged, with an artless failure to rationalise environmental clearances and reach a consensus on property rights, because the UPA lacks the credibility and finesse to convince the country. Wayward policy coordination and implementation have meant that despite the installation of additional power generation capacity fuel shortages hinder operations. The scam over coal allotments has underlined the UPA’s real priorities, which is not to address the issue of power outages, but milk the country to the hilt.
The hoped for dividends of economic policy change in the 1990s, which the National Democratic Alliance had managed to keep somewhat alive in many areas, like road building, have been squandered without apology by the UPA. It has failed on virtually every front, with extortion and bribe-taking the principal substitutes for governance during the tenure of a prime minister whose alleged personal probity has become a mere cover for crime. Unfortunately for him, the public has understood that personal probity is not synonymous with moral integrity. In a recent article on the disarray of governance in India, Professor Bharat Karnad has warned of the likely calamity should the National Disaster Management Authority, staffed by worthless political appointees, be called upon to fulfil its remit and respond to the aftermath of a nuclear assault against an Indian city. This is what it has all come to. Serious reformist policy is beyond the capacity of the UPA, no matter how pressing.