|
|
|
|
|
Pressure on rupee
Not by transfers alone |
|
|
Tragic trail
Artful dodgers all
Rupee less than a peso?
Rethinking India’s reforms process
|
Pressure on rupee
A
sharp depreciation of the rupee against the dollar in the last few days has jolted investors. The rupee, which touched its life-time low of 58.98 on Tuesday before recovering slightly, is not alone in its free fall. The dollar is strengthening against the currencies of several emerging markets. Foreign institutional investors are withdrawing money from debt markets in Asia and elsewhere to buy assets in the US where returns are picking up. FIIs have pulled out $1.45 billion (about Rs 8,226 crore) from India in June so far. The rupee fall has continued due to RBI inaction. In fact, it picked up momentum after Governor D. Subbarao spoke about limitations of RBI intervention. Though India has enough foreign exchange reserves, the RBI cannot afford to prop up the rupee indefinitely. Since currency depreciation is not India-specific, the rupee is moving in keeping with the global trend. Sharp swings triggered by traders are, however, manageable. The obvious gainers of the rupee plunge are exporters, particularly drug and IT companies. NRIs coming home with dollars should be happy, while Indians going abroad for studies, business or holidays will bear the brunt. Oil and gold importers are the worst hit. Since the burden of costlier crude is borne by the government, the treasury is in trouble. The government is trying to discourage gold imports by raising taxes. But the fall in gold prices has spurred demand. The government's finances, already strained by welfare spending, are being further stretched by costlier oil imports. Because of the weak rupee and a high current account deficit the RBI is unlikely to cut interest rates further. This has disappointed industry and investors. So far FIIs have been hopeful on India, believing the worst is over. Yet the emerging economic scenario is uninspiring: the GDP growth rate at a decade low, a weak rupee, tight monetary policy, slowing reforms and a looming general election. If FIIs start dumping Indian stocks, the rupee would face a rougher weather. |
|
Not by transfers alone
A
purportedly well-intentioned scheme of the Punjab Government to have at least 100 hospitals in the state with all specialists available has ended up in a mess. More than 500 specialist doctors transferred from smaller health centres, mostly in rural areas, to larger hospitals for the purpose have thrown a spanner in the works, alleging arbitrariness in the process. That there was a huge anomaly in many doctors managing to stay posted in areas around major cities — presumably by using influence — cannot be debated. To that extent, the government had for once demonstrated resolve by not sparing anyone. However, it seemed to have bit more than it could chew, for an exercise to cancel a large number of the transfers is already under way, with the Health Minister paying heed to ‘genuine grievances’. A government is well within its rights to transfer doctors to use them optimally. However, in Punjab’s case the problem is that the government is trying to achieve more, but not by investing more. To improve the facilities at the bigger hospitals, it is robbing several smaller centres of specialist care. Certain specialists — like gynaecologists — are equally effective in small hospitals. This has led to local residents also protesting in many places. With some of the specialists, especially those hired under the National Rural Health Mission, the government is on a sticky wicket. It was with great difficulty that the government had been able to attract them at a low contractual pay. In the process of large-scale transfers, the government may end up losing many of them. But any specialist posted at a place where his services cannot be optimally utilised for want of equipment does need to be moved out. Punjab suffers a major deficiency in public health services, leaving people to seek private care, which for many is unaffordable. To a large part, shortage of doctors and technical staff is responsible for this. Many hospitals have empty corridors as there are no doctors who the patients may visit. Then there is equipment lying unused for want of operators. The government cannot find a quick fix to this through transfers. More staff will have to be hired. |
|
|
Tragic trail
It would have read like a filmy love story. Instead, it has become a bloody one, what with the tragic trail and the triple murders it has brought in its wake. Love can move mountains but that the same emotion could impel a man, in this case a suspended police constable Basant Singh, to allegedly commit three murders within a span of two months is truly abominable. At one level it is a reflection of deeper malaises that run in our society and at another of the shocking depths to which the human mind can plumb. Indeed, the heroic death of Inspector Sucha Singh, who along with Home Guards Volunteer Jatinder Singh, had bravely faced Basant Singh who was on the run ever since he allegedly killed his beloved Sarita’s husband and mother-in-law, does prove that all members of the police force can’t be painted with one brush. At the same time, the murky incident does underline all that’s wrong with the functioning of our police force. The fact that Basant Singh, a constable with the Indian Reserve Battalion of the Chandigarh police, had managed to fraudulently obtain a self-loaded rifle from police lines in Chandigarh while under suspension and used the same to commit the crime does put a question mark on the police efficiency and its systems. The police are supposed to establish law and order and curb incidents of crime and not exacerbate it, either directly or inadvertently. The fact that members of the police force get embroiled in cases such as these calls for deeper reflection. While the accused has been nabbed and the law will take its own course, police functionaries need to do some quick thinking and get their act together. Why is it that more often than not, its response time to distress calls is lax? In this incident as in several others, had it acted promptly and swiftly, a precious life could have been saved. That this time it was one of their ilk makes it doubly ironical, yet no less excusable. |
|
|
Our happiness depends on wisdom all the way. —Sophocles |
Artful dodgers all
The Centre's meeting with Chief Ministers on the Maoist threat was a damp squib.It was boycotted by Jayalalithaa and Mamata Banerjee and near-rubbished by several of those who attended. Low politics triumphed. The diluted proposal for a National Counter-Terrorism Centre to coordinate all intelligence and operational planning was turned down as diluting federalism, a bogey, and on grounds of creating new institutions instead of consolidating institutions already on the ground, an argument that is partly true. In any event, the NCTC is necessary and its absence could aggravate future vulnerabilities.
The Prime Minister had little to say and the Home Minister, even if in passing, shifted attention to efforts to revive the Khalistani cause with assistance from across the border. The emphasis was expectedly on the law and order aspect after the recent Maoist carnage in Bastar. Little was said on development strategies and nothing at all about the gaping hole in the critical constitutional framework created by the virtual abrogation of the Fifth Schedule. This brazen indifference towards constitutional practice without debate or amendment is undermining the State and poses a clear and present danger to good governance. The Centre has abdicated its responsibility and the Prime Minister, having set up a National Tribal Council, has chosen not to activate it for over a year. The Tribal Affairs Ministry has been sidelined and the Minster shabbily snubbed by all and sundry. The Centre has also allowed the Telengana issues to drift despite repeated assurances of intent that have led those demanding its formation up the garden path. The fear is that the grant of Telengana will trigger similar demands to many of which the Centre and other parties are committed in principle. But this was always obvious and, if so, why make categorical electoral promises and raise false expectations, not once but repeatedly. Yes, there are complex issues involved but indecision is not governance. The argument that Hyderabad is a prize to which other regions of the unified state lay claim, is perverse. It was Nehru's obduracy over keeping Bombay out of Maharashtra in 1958 that makes the Shiv Sena parochially root for reserving Maharashtra for the "Maharashtra manoos". Small states (with smaller districts and blocks) are desirable from the point of view of techno-economic management, enhanced popular participation and accountability. There are other mechanisms through which inter-state and intra-sectoral coordination can be fostered. It is not the Congress alone that may be faulted for lowering standards. The BCCI scandal has shown how low sport has sunk at the hands of unscrupulous elements — underworld dons, bookies, greedy players and devious managers. Cricket, as much else, has become commerce and got highly politicised with sporting managements being cornered by ministers and politicians on long-term or even lifetime "contracts" through cabals and cosy cartels who use these positions of vantage as a perch for patronage and to "manage" the show rather than for any good they do. This kind of insider trading must stop and such positions should be designated offices of profit that would debar ministers, MPs and MLAs from holding them. The former BCCI chief had the gall to hang on when he had lost all moral right to do so and then set magisterial conditions for his temporary leave of absence which were conceded. And he has been momentarily replaced by his predecessor who had early left under a cloud in controversial circumstances. What have we come to! Politicians make all manner of extravagant and totally self-serving demands, the latest being a shameless move to grant Karnataka MLAs private club membership! The CIC may have pushed the envelope in describing political parties as "political associations" in view of certain monetary favours and demanding that they be accordingly brought under its jurisdiction to compel disclosure of their funding and accounts. The MPLADS and state assembly equivalent are a case in point. Every single party has protested in pious horror, as exposure would expose a good deal of sleaze. They protest too much, as they unanimously did on the most petty and pathetic grounds when it was ordained that electoral contestants file a declaration of assets. What has been notable since is that these assets seem to multiply magically in the case of quite a few as soon as they are elected honourable members. The CIC may be a clumsy or inappropriate route to discipline parties. The real lacuna is the absence of any definition of a political party in the Constitution. Given that, laws could be enacted to govern their duties and responsibilities such as membership, inner party elections, sources of funding, auditing of finances, investments and so on. All this is presently completely opaque. The defection law and procedures for the allotment of symbols to "recognised" parties are often touted but are utterly irrelevant in the context of defining and regulating political parties. It is, therefore, time to press for such a constitutional amendment in order to curb party-political and electoral graft which is a major font of corruption. Who will bell the cat? There is no substitute for relentless public pressure. One welcome event this last week was the laying of the foundation stone of the National Defence University in Gurgaon, 14 years after it was recommended by the Kargil Review Committee and some years after it was formally approved. The NDU will fill a gap in strategic thinking and understanding in the country but only if we restore geography as an important academic discipline and lower the totally nonsensical bar on the classification of information and maps. These barriers have seriously undermined the nation's geo-political, geo-strategic and cartographic sense and sensibility.The situation is worse in the border regions where formidable taboos reign. The classification policy is utterly retrograde as we sit tight on information whose operational value is long past but from which valuable lessons can be learnt and historical contours refined. A nation that denies itself the knowledge of its own history and geography is in peril. And the degree of historical and geographical/geo-political illiteracy that stalks the corridors of power is shocking. It is time the necessary corrections are made in classification and archival policy. With the steady opening up of foreign archives, Indian scholarship and policy making are becoming dangerously dependent on foreign versions of Indian events. This cringing intellectual deference to foreign powers is tantamount to an erosion of independence even as sundry duffers cry Jai Hind! Finally, admissions to Delhi University have happily commenced under the new four-year-undergraduate programme dispensation. Opposition continues. An unsatisfactory status quo must yield to change, given enough common sense to make mid-course corrections as and where necessary. Bravo
DU!  |
|||||||
Rupee less than a peso?
We seem to have forgotten Mahatma Gandhi in all but name. He practised stark simplicity; we flaunt our wealth — our marriage pandals today are majestic mansions with arrays of multi-cuisine stalls serving thousands of guests. He said India lived in villages — modern India lives in high-rise glass-façade towers of Mumbai, Bangalore and Gurgaon. He dedicated his life to serving the nation — we have become a nation of self-servers! But in one thing we continue to pay homage to him — we print his photograph on our currency notes of all denominations. Ironically, we have made the man who was wedded to poverty, daridra narayan, an icon for the Indian rupee! Although his name continues to command respect all over the world, sadly the Indian rupee does not. Years ago when I had gone to London, I was told that I needn’t change rupees in pounds as there were any number of Indians there — exchange was not a problem. But when I showed a wad of rupees with Gandhi’s smiling visage printed on them to a girl at the exchange counter in London, she said, “Throw them in the garbage bin.” I have found that there is only one country in the world where the Indian rupee is respected — in Nepal. Nepalis welcome the Gandhi-face rupee with alacrity — they seem to be the only lovers of Gandhi left in the world. I like good old Kathmandu, its old palaces and temples, and the beauteous lake at Pokhra reflecting the snow-clad fish-tail mountain peak — matsya puchcham — but you can’t go there every time. I had gone to Manila recently where my daughter Jyotsana lived. It was a pleasant surprise to find that the Philippines currency is called the peso. I imagined that like Indonesia, which called its currency Rupaiya due to Indian influence in South-East Asia in mid-centuries of the last millennium, the Philippines too had named its currency after our lowly paisa. But I was puzzled when I found that the peso was stronger than our rupee — while 40 pesos would get you a US dollar, you had to shell out 56 rupees for it! Indeed, I was mistaken. The Philippines peso came from its former ruler, Spain — the word was derived from the Latin word pensum, meaning to weigh. But that was not all. The worst insult was that while the exchange booth in Manila listed the Indonesian rupaiya on its display board, though way down in value, there was no mention of the Indian rupee. They don’t recognise the Indian rupee, Gandhi and India’s greatness notwithstanding. It beats me hollow. We claim to be the fourth largest economy in the world and yet our currency, carrying the noble Gandhi image, can only be bartered through the shady hawala wheeler-dealers. What a shame! One thing more. When the British ruled this poor down-trodden country, 15 rupees equalled one pound sterling. Since Independence, we have taken rapid strides towards prosperity — look at our six-lane highways being chockablock with swanky cars. But, curiously, the poor Gandhi-face rupee, descendant of the Sanskrit ‘rupya’ (‘a stamped coin in wrought silver or gold’, according to Monier-Williams), has been going down against the dollar and the pound in inverse proportion to our growing economic strength. Today the pound sterling is over five times stronger! My feeble mind fails to solve this
conundrum. |
|||||||
Rethinking India’s reforms process
India's bogged down process of reforms, set going again recently, brings home the fact that for sustainable and equitable development production policies cannot be divorced from distribution policies. Also, with the unchecked growth of population the core concern of a nation ought to be with the growth of employment opportunities rather than with the stepping up of the economy's overall rate of growth. India's planners, mostly trained in Western liberal education, not only failed to see all this; they also failed to impress upon the policymakers that for success the first generation reforms – aimed at dismantling of controls – and the second generation reforms – focusing on building institutions (social, political and legal) – go together and are not sequential. They were more concerned with factors like saving-investment ratios and technological inputs which could change the growth trajectory without realising that they were dealing with a nation which is one of the world's oldest civilizations and had its roots deep in the past which cannot be pulled out all too easily and suddenly. Nehru’s four reasons for mixed economy Jawaharlal Nehru, independent India's first Prime Minister, was not only a statesman but also a widely travelled historian. He chose for his country the mixed economy approach discarding both the Marxian economics which he thought was doctrinaire and the free market system which he thought led to socially divisive growth. His decision in favour of the mixed economy approach was based on four major considerations.
First, he thought that an 'acquisitive society was no longer suited to the present age' and sought its replacement by 'a classless society based on cooperative effort with opportunities for all'. Second, as a historian Nehru was fully alive to the fact that the free enterprise system had a built-in tendency to promote economic and social inequalities and had therefore to be discarded. At the same time he could not give his assent to a fully controlled system as he thought that such a system is bound to lead to 'authoritarianism' and 'totalitarianism' and was therefore irrational. He sought a system which could 'realise economic growth and social justice without the sacrifice of freedom and the democratic rights of the common citizen'. Third, contrary to popular belief, Nehru did not regard the mixed-economy pattern as a half-way house between the capitalistic and the communistic forms of economic organisation. To him the mixed economy was a synthesis of the two systems and, freed from their dogmatic approaches, represented a higher form of economic organization. Moreover, he took the position that the mixed economy alone possessed flexibility and resilience to assimilate changes in human activity and modes of production made possible by the continued phenomenal growth of science and technology. And forth, Nehru believed that there was a direct relationship between economic activity and development of human character. He argued that if the individual had to realise his dignity and the fullest development of his higher faculties, it was necessary to provide him with adequate incentives – both pecuniary and non-pecuniary. Indicating that 'private enterprise would ... have a large field' in the future set-up of the country – though its functioning would necessarily have to be modified to delink it from its acquisitive basis – he justified it thus: 'We have to encourage the spirit of adventure, of invention and of taking risks in order to give an edge and substance to our lives'. Development is not just about growth of incomes Nehru was a great champion of rationalism but he did not believe in ethical neutrality. While formulating his economic policies he carefully weighed their impact on social fundamentals. For him, development was not just about growth of incomes. It was everything that promoted human wellbeing. That dream did not last more than half a century. In 1991 India embraced neo-liberalism in which the main concern of the State policy was to promote the fundamentals of a free economic system regardless of how the fundamentals in people's lives were thereby affected. The new economic order was introduced without a mandate and not every section of the Indian society felt upbeat about it. The change in the system, welcomed initially, is now being increasingly regarded as unfortunate. Instead of delivering on more jobs and shared growth it has resulted in unceasing growth of corruption, unemployment and inequality – both economic and social. All this has been affirmed by no less an authority than the President of the World Bank Group Jim Yong Kim. Of corruption, he observes that 'it acts as a regressive tax, penalizing poorer citizens and smaller firms'. In his Foreword to this year's World Development Report his emphasis is on job creation which he describes as a matter of critical concern across the globe. In this context he also cites an estimate of 200 million people who are unemployed of whom 75 million are under the age of 25. In place of a socio-economic revolution the free market system has heralded a technological-managerial revolution which has polarised the Indian society into two sharply antagonistic orders – upper classes and submerged masses. Where do we go from here? There is a saying, 'No one goes farther than the one who knows not whither he goes'. It did not occur to those in power at the time when the blueprint of the new economic policy was being scrutinised for adoption that the free economic system was relevant only for the countries which had adequate resources considering the size of their populations. Furthermore, public opinion in these countries favoured laissez-faire – the doctrine that 'individual freedom in economic enterprise should not be restricted by government or social regulation'. The two textbook examples quoted in this context are those of the United States, where the switchover to an unfettered free market system was accomplished by President Ronald Reagon, and Great Britain, where this was accomplished by Prime Minister Margaret Thatcher. Unfortunately, what is overlooked in this context is the adverse impact of their policies such as widening disparities of income and loss of employment opportunities on those who were on the fringe of society – the Blacks in the United States and the migrant labour in Great Britain. Mahatma Gandhi, the greatest nationalist leader of India in recent times, repeatedly warned his countrymen to evolve their own strategies of development and avoid living on borrowed wisdom. In his simple way of reasoning he put his exhortation thus: the Western countries have plenty of resources, we have plenty of wants; their problem is making optimum use of resources, our problem is moderation of wants. India’s switchover to free market system Although Prime Minister Rajiv Gandhi is often mentioned as the mentor of the free economic approach, it was P.V. Narasimha Rao who in that position set about implementing it as a system. After shortlisting Dr. I.G. Patel and Dr. Manmohan Singh, he invited the latter to join his Cabinet as the Minister of Finance and present that year (1991-92)'s budget embodying the spirit of the new system. Quoting Victor Hugo (the French novelist and poet) that "no power on earth can stop an idea whose time has come", Dr. Manmohan Singh in his budget speech assured the Parliament that he will not renege on his Government's commitment 'to the pursuit of equity and social justice'. That this did not happen shows that the free market system cannot deliver on both development and shared growth at the same time. The fear that its adoption may lead to the formation of monopolies, oligopolies and similar malpractices and encourage practices like cronyism in public decision-making has come largely true and made the state apparatus and governance dysfunctional to a considerable extent. In an article, perhaps the only one The Tribune published when Dr. Manmohan Singh took over as the Prime Minister, I wrote the following: ‘History is fiercely protective of space it has reserved in its hall of fame, and is generally disinclined to honour every celebrated person with a bust or a tablet. As someone who has known Dr. Manmohan Singh as a close personal friend for almost 50 years and has tried to study his work and thought, I have nothing but profound admiration for wholesome pursuits to which he has dedicated his life. It is too early to judge at this stage how he is going to acquit himself as Prime Minister in the highly polarised politics of the country. But the dignity, humility, and goodwill with which he has taken over provide some indication that he is going to succeed. I consider him both a man of the moment and a man of history’. Considering the dismal record of the government over which he is presiding Dr. Manmohan Singh's high reputation stands noticeably obliterated. He tried to bend the arc of history against much that he stood for in his earlier years. Perhaps, the system failed him. The nation today yearns for leadership of Nehru’s stature and vision so that it can march forward with confidence and hope, bearing all tribulations and sacrifices the process of development entails willingly. In its absence could we not at least get rid of our obsessions with the free market economy and rethink the process of development in the mixed economy pattern? The writer is Emeritus Professor of Economics and formerly Vice-Chancellor of Punjabi University, Patiala |
|
| HOME PAGE | |
Punjab | Haryana | Jammu & Kashmir |
Himachal Pradesh | Regional Briefs |
Nation | Opinions | | Business | Sports | World | Letters | Chandigarh | Ludhiana | Delhi | | Calendar | Weather | Archive | Subscribe | Suggestion | E-mail | |
