The recently released figures of economic growth are like a wakeup call for the Centre and the Congress Party. A continuous decline in the economic growth is being witnessed during UPA government’s second term. A growth rate of 6.1 percent has been registered this time and even further, similar figures are being predicted for the next quarter. Such a low growth rate can’t be acceptable. India needs a growth rate of more than 8 percent to ensure inclusive growth especially to effectively deal with the problems like poverty, malnutrition and illiteracy. Actually, it is essential to enhance this figure and also to maintain its pace for the next many decades.

In its second term, the UPA government had promised to work for the common man. To meet its promise, the government has not only widened the ambit of its social welfare schemes like MNREGA and National Rural Health Mission but the allocation of fund for these schemes has been also increased. Thereafter, the UPA government started working on Food Security Act and recently it has declared to expand its expenditure on public health up to 2.5 percent of the GDP. Moreover, on several occasions the government had announced loan wavers. No doubt, the increased expenditure for these public welfare schemes has borne fruit but unfortunately such schemes are mired by unscrupulous irregularities and corruption. It is true that these schemes have failed to achieve their real targets. Perhaps this is the reason why it is highly being demanded to scrap the MNREGA. It should also not be ignored that the labourers have stopped to migrate to the other states in pursuit of work after MNREGA as it provides them a sources of livelihood while staying at home. This is adversely affecting the agricultural growth besides, industrial growth. We don’t have the figures in support of our claims that the immobility of the labourers on account of assured income from MNREGA is adversely affecting the economic and industrial growth in the states which have agriculture or industry based economy, however the voices being raised in this regard cannot be ignored. 

The policy-makers of the UPA government especially economic advisers might feel happy about their plans but they cannot overlook the zooming fiscal deficit. On one hand widening fiscal deficit and northward inflation have triggered a panic in the industrial world, on the other no proper improvement on health and education related infrastructure is seen.

Despite all these deficiencies, the government is not ready to curb the irregularities in its ‘populist’ welfare schemes. Union Finance Minister has, on many occasions, expressed his concerns over increasing burden of subsidy; nevertheless the government is bent on increasing the burden to enhance its vote-bank. The government has started making the schemes as its political tools, though the same is proving fatal for it. If the economic condition is not improved, India may also land into the same financial troubles which the European countries face today. It would be proper if the policy makers of the government realize about glaring deficiencies in their economic strategy.

The Centre is encountering economic challenges at length when its political challenges are already at rise. The results of Assembly polls in five states are due to come out on Tuesday. If the Congress party faces adverse mandate in Uttar Pradesh, Uttarakhand and Punjab for failing to curb the problems like corruption and inflation, then Prime Minister Manmohan Singh and some of his ministers are bound to face the aftermath effect. But in fact, they should not be held completely responsible for the present economic scenario and declining mass-appeal of the government. We have ample reasons to believe that the people who are supportive of populist agenda are predominant in the government. It is obvious that the government is being forced to bear the burden of Food Security Act. It is difficult to figure out that Dr Manmohan Singh who is credited to begin a new era of economic reforms has now largely been unsuccessful in tackling the present economic challenges. Has he been denied to exercise his acumen on economic matters? Whatever may be the reason, the results of assembly polls in all five states will be followed by the general budget. Budget will be tabled little late because of the model code of conduct imposed by the Election Commission. This budget is going to be a litmus test for the Centre’s economic planning. Problems for the central government are deepening because the opposition parties and the state governments have not shown cooperation in tackling them. Opposition parties assume the prevailing situation as a good opportunity to capitalize the situation in their favour. Perhaps this is the reason behind the confrontation between the centre and the states on numerous occasions.

Recently, the trade unions associated with all the political parties gave a joint call of one day strike which caused a loss of Rs 10,000 cr but nobody seems ready to pay heed to the loss. According to the left parties, they staged protest in support of the demands of nearly 37 crore labourers and workers of the country, interestingly when it comes to labour reforms, the same left parties prefer to turn a blind eye to the subject. They cannot ignore the fact that the substandard level of work-efficiency of the labourers is also to be blamed for India’s worrisome economic growth. The trade unions are mainly focused on their interests and they are not ready to support the reforms. They are well aware of the fact that the average output of the Indian labourers is much below the mark and Indian industry is suffering because of it, but they are not ready to discuss the issue. However, the Prime Minister and his cabinet colleagues are precise in expression that the old labour laws are not going to serve the purpose and a need for radical change on this front is to be sought, but unfortunately, the Congress and other parties are seen toeing the line of the trade unions. It is so because the labourers and workers are treated as a vote bank by the parties and none can afford to annoy them.

Whatever be the poll results, but it is now clear, if the petty politics is not stopped in economic affairs and populist agenda of the parties are allowed to determine the decision process by flouting the economic norms, coming days may be more challenging. It is a need of hour that the Congress party and its alliance offer a similar kind of assistance to the Prime Minister which he received while he was the finance minister in 1991. If the vote bank politics is not discouraged, the crisis is bound to deepen for the Congress Party which is ruling at the centre.

(An original copy of the article published in Hindi on March 04, 2012 translated by the English Editorial. The author is Group Editor of Dainik Jagran)