Tacit Confession of guilt by Prime Minister Man Mohan Singh on economic crises

The guilt:

The Congress Government headed by Prime Minister Dr. Man Mohan Singh has completed 8 years in office. Before that BJP was in Government for mere five years. Since independence of India in 1947 different Congress Governments have ruled for about five decades but to tackle with inflation has been its dismal failure on all occasions. The fact that Prime Minister admits that situation of the nation is as worse as it was in 1991 amounts to an admission of guilt because in 1991 he had blamed the misrule of other parties in last 3 years for the escalating fiscal problem. The fact that he and this Government is in power for 8 years and it could do nothing to prevent the situation, is nothing but an admission of guilt of mis-governance.

The proof of guilt of mis-governance of nation and economy:

He is boasting the growth of 8.2% in GDP when his last Minister had no clue last year. As an economist he should have refrained from this rhetoric. With inflation at the rate of 10%, the effectual GDP comes to a minus or negative 1.8% which means that more people will starve or sleep with one meal in a day than earlier due to high prices of food. In fact entire speech is silent about exorbitant rate of inflation and Government’s inability to control it. This is the extract of the last few paragraphs of the speech of the Prime Minister delivered on 21 September 2012:

In 1991, when we opened India to foreign investment in manufacturing, many were worried. But today, Indian companies are competing effectively both at home and abroad, and they are investing around the world. More importantly, foreign companies are creating jobs for our youth — in Information Technology, in steel, and in the auto industry. I am sure this will happen in retail trade as well……

The UPA Government is the government of the aam aadmi.

In the past 8 years our economy has grown at a record annual rate of 8.2 per cent. We have ensured that poverty has declined much faster, agriculture has grown faster, and rural consumption per person has also grown faster. We need to do more, and we will do more. But to achieve inclusiveness we need more growth. And we must avoid high fiscal deficits which cause a loss of confidence in our economy.
I promise you that I will do everything necessary to put our country back on the path of high and inclusive growth. But I need your support. Please do not be misled by those who want to confuse you by spreading fear and false information. The same tactics were adopted in 1991. They did not succeed then. They will not succeed now. I have full faith in the wisdom of the people of India.
We have much to do to protect the interests of our nation, and we must do it now. At times, we need to say “No” to the easy option and say “Yes” to the more difficult one. This happens to be one such occasion. The time has come for hard decisions. For this I need your trust, your understanding, and your cooperation. (Source: http://pmindia.nic.in/speech-details.php?nodeid=1226)

If we read the sentences in bold emphasis below and above we see how pathetically, the Prime Minister avoided the real issue. This is the extract from the speech of Dr. Manmohan Singh delivered as a finance Minister of the Country in 1991:

The new Government, which assumed office barely a month ago, inherited an economy in deep crisis. The balance of payments situation is precarious. International confidence in our economy was strong until November 1989 when our Party was in office. However, due to the combined impact of political instability witnessed thereafter, the accentuation of fiscal imbalances and the Gulf crisis, there was a great weakening of international confidence. There has been a sharp decline in capital inflows through commercial borrowing and non-resident deposits.
As a result, despite large borrowings from the International Monetary Fund in July 1990 and January 1991, there was a sharp reduction in our foreign exchange reserves. We have been at the edge of a precipice since December 1990 and more
so since April 1991. The foreign exchange crisis constitutes a serious threat to the sustainability of growth processes and orderly implementation of our development programmes. Due to the combination of unfavourable internal and external factors,the inflationary pressures on the price level have increased very substantially since mid-1990. The people of India have to face double digit inflation which hurts most the poorer sections of our society. In sum, the crisis in the economy is both acute and deep. We have not experienced anything similar in the history of independent India.
3 . The origins of the problem are directly traceable to large and persistent macro-economic imbalances and the low productivity of investment, in particular the poor rates of return on past investments. There has been an unsustainable increase in Government expenditure. Budgetary subsidies, with questionable social and economic impact, have been allowed to grow to an alarming extent. The tax system still has many loopholes. It lacks transparency so that it is not easy to assess the social and economic impact of various concessions built into its structure.
The public sector has not been managed in a manner so as to generate large investible surpluses. The excessive and often indiscriminate protection provided to industry has weakened the incentive to develop a vibrant export sector. It has also accentuated disparities in income and wealth. It has worked to the disadvantage of the rural economy. The increasing difference between the income and expenditure of the Government has led to a widening of the gap between the income and expenditure of the economy as a whole. This is reflected in growing current account deficits in the balance of payments.

Would Ho’ble Prime Minister explain what steps he took in last 8 years to boost the economy and if retail FDI was the magic wand, why it was not applied earlier? If he was not given free hand for governance why did he not resigned from office? Is it not tacit confession of guilt by Prime Minister Man Mohan Singh on economic crises?
It is unfortunate that politics and greed to remain in office can turn an honest bureaucrat into pathetic suppressor of truth if not rank liar.

© Sandeep Bhalla

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