It has been one of the most contentious of the issues in recent times. At a time when the fiscal deficit is growing, Prime Minister Manmohan Singh has times and again said that FDI in retail is required because it will bring in investments. With the GDP growth struck at less than 6 per cent, foreign investment is desperately required to kick-start the economic engine. He has therefore put the UPA government at stake to seek approval for FDI in retail.

But how much foreign investment is expected to pour in with the approval to retail FDI? According to government’s own estimates, Rs 16,500-crore ($3 Billion) is what is expected to come in as investment in the next 5 years. Isn’t this peanuts considering that Finance Minister P Chidambaram has warned the public sector undertakings to flush out the surplus cash of Rs 2.5 lakh crore that they are sitting on. He wants the PSUs to invest the surplus cash in economy.

Not only the PSUs, corporate India too is sitting over massive piles of cash. Call it hoarding or surplus, at the end of last financial year ending Mar 31, Indian companies were sitting on cash and cash equivalents -- liquid investments that can easily be converted to cash -- of over Rs 9.3 lakh-crore (or $ 166 billion). And still, the Indian govrnment is Gung-ho over the move to open up for FDI in retail, expecting just 16,500 crore in the next five years. There is certainly something terribly wrong with the way economy is being managed.

Take a look globally. I don't understand how can any sensible person, least of it an economist or a policy maker, justify this paradox. The US economy is in crisis at a time when many businesses are sitting on record levels of cash on their balance sheets. Amid a lackluster earning season that have featured many companies missing sales expectations, cash balances have swelled 14 per cent and are on track toward $ 1.5 trillion for the Standard & Poor's 500. The IT giant Apple alone sits over $ 117 billion.

What's the situation in Europe? According to reports, in the Eurozone, Corporate overall hold around Euro 2 trillion, in the UK. The American companies operating in Europe are sitting over a cash pile of US$ 2 trillion. It is therefore quite evident. There is no shortage of money in the world. It is only that the government’s treasuries across the world are empty while the private sector is hoarding mountains of cash reserves.

US President Barack Obama, getting into his second term, had talked consistently about the "rich paying their share" to prop up the sagging economy. Many believe he won because he spoke the language of the majority, the 99 per cent. But no sooner the elections results were out, I see the mainline economists launching a tirade against his election promise of imposing higher taxes on the rich. You watch them articulating their flawed hypothesis on TV, and of course their voice resonates in the corporate-controlled media across the globe.

The fiscal deficit argument is so strong and so well entrenched in the political thinking that the European governments too have been blindly adopting it to overcome Europe’s debt crisis. No government however is launching any assault to curb corruption, which could easily wipe out the fiscal deficit. Nor is any effort being made to force the private companies to take out the surplus cash and invest in the national economies. So it is the poor who have to suffer to keep the rich in saddle. The impact of such negative policies are visible across the world.  

With millions of workers thronging the streets across Europe in protest against spending cuts which has aggravated recession and led to mass unemployment, the frustration is growing. Whether it is the US, Europe or India, the average citizen is angry at the policies that are cutting into social security funding making it more difficult for them at times of an economic recession. But is this a sacrifice that the poor have to entail? How long can the ordinary people be made to suffer while the rich sit pretty over tons of hoarded cash? How long can the economic system allow concentration of wealth into the hands of a few while the world struggles for a decent livelihood?

The well-know economist John Maynard Keynes had once said: "The boom, not the slump, is the right time for austerity", I turned to Paul Krugman to see whether he prescribes any other solution. Here he goes:

"Back in 2010, self-styled hawks -- better described as deficit scolds -- took over much of our political discourse. At a time of mass unemployment and record low-borrowing costs, a time when economic theory said we needed more, not less, deficit spending, the scolds convinced most of our political class that deficits rather than jobs should be our top economic priority. And now that election is over, they are trying to pick up where they left. They should be told to go away.”  

Reading Paul Krugman, and seeing the mass protests around the world, it is quite clear that a few corporates are holding the economy to ransom. Look at the Indian Prime Minister Manmohan Singh. To overcome the difficult prevailing economic situation, he is asking the cash-rich 25 public sector undertakings to invest Rs 2.5 lakh crore surplus they hold 'to reignite the economy'. But no such appeal is made to the private sector companies which are sitting over four times of more cash than PSUs.. Is he afraid of annoying the corporates? In all probability, he is.  

For some strange reasons, austerity means providing tax concession to the rich and powerful, and taxing the poor. I don’t understand the rationale behind this. At the time when the world provided economic bailout packages (after 2008-09 economic meltdown) of roughly $ 20 trillion, no economist warned of fiscal deficit.  No economist told us not to use the public tax-payers money to bail out the banks and the Corporate. It is wrong economic policies that have resulted in the private sector accumulating cash, which they claim belongs to them only.   

In simple words, $ 20 trillion has actually gone in to shore up the bottom line of Big Business, insurance, banks and industry. It provided more wealth in the hands of the wealthy. In such difficult times, when the bailout packages should have been for providing more employment, health, education and food to the needy, it went into the pockets of the rich. The trickle down – from the rich to the poor -- did not happen. In fact, it never happens. The entire economic system therefore works on the underlying but utterly flawed principle: "Privatisation of profits, and socialisation of costs.”