With inflation at 10%, housewives have to choose between math tuition, milk and movies. Each costs about a lakh a year and so doing all three is impossible. (Did you realize it costs Rs 12,000 a month, or Rs 1,44,000 a year, for family of four to enjoy a movie and popcorn every Sunday?)
A weakening global economy is responsible for much of this. But the governmental indecision and political posturing are proving lethal for the economy.
Politicking over scams has disrupted India’s “sunrise” industries, namely airlines, telecom, and the stock market. Mismanagement has gutted India’s two traditional economic engines, agriculture and the railways. India now grows just one-third the food China grows per acre, and moves just one-fifth the freight China moves per kilometre , , ,
Next week, Finance Minister Pranab Mukherjee will use the G20 meet to try to re-awaken investors’ interest in India as a low-cost base. But how can he hide that India now has the most expensive real estate in the world, the most expensive electricity, and the most expensive logistical infrastructure? How long can we hide the fact that political blundering and corruption has turned India into a high-cost economy?
We don’t need a “magic wand” to correct our listing economy. We just need to make some savvy decisions:
- We can lower food prices by releasing more food from our storage facilities into the market.
- We can raise the supply and cut the prices of consumer goods by cutting customs duties.
- We can release land at low prices to developers to make homes and factories more affordable.
- If we cut subsidies on fuel, we must also cut the taxes on fuel. In fact, we should cut taxes for all citizens and corporations, who pay one of the highest rates of income tax in any developing nation.
- The government can raise revenues by taxing second (investment) homes and speculative financial transactions.
- We can revoke and then auction undersold mining licences so that the exchequer gets their full market value.
- We can cut or hold the $100 billion in defence spending we’ve splurged on, just as the U.S has done.
But doing this will take focused, dedicated work – something the government doesn’t seem to have the will to do and something the Opposition won’t give it the space to do.
Yes, the price of everything is rising. But not more steeply than the price we are paying for our petty politics.