For a country as poor as India, growth should be what the US calls a “no-brainer”; said by a erudite person Raghuram Rajan about economic state of India. If growth of country like India is so easy; then what happened, the growth slowed down so terribly; Prime Minister office has to inform that GDP growth in 2013/14 seen at 6.4 per cent, which anyway will go down, when final evaluation comes as government figures has a long history of being incorrect. So the question comes back again, why a matter so trivial like growth as said by erudite, is haunting India and why can’t government as big as India; cannot fix the issue of growth and put everything back on track. Government is busy giving weight and money behind phoney schemes like NREGA/Food Security bill, it will “No-Brainer”; if new scam bigger than anything else comes to hit news in recent future. So issue is much deeper here which will be covered later here; but for now let’s hear some other demands or rather “THINGS TO HAPPEN” from erudite mentioned here:
· a matter of providing public goods:
· decent governance,
· security of life and property, and
· basic infrastructure such as roads, bridges, ports, and power plants,
· as well as access to education and basic healthcare.
Anybody who has an idea of political manifesto, will find almost all the items in some form or the other mentioned in “things to do” list of political parties. So, even after having that in manifesto and shouting out loud in public by politicians to complete the list; which anyways never gets touched, then what forced erudite, to write the same boring stuff in his article why India slowed. This is just to introduce a cover up story when things go haywire after government’s phoney schemes like NREGA; paid news channels and reporters can use this article to produce a story that so called economist has already said that and now it is happening. The fundamental problem with the proposition here is that erudite wanted all the items, which can be easily produced by the private sector, need to be addressed by the government. Ideally government should not be present in the business of producing the goods, but in socialist economy like India, government is producing the major chunk of substandard and lower goods and people are made to believe that goods are sub standard because funding is not done proper or marred by corruption or administration is not good enough to administer the task. The fundamental problem is when you give “free money” to anyone irrespective of where the person or institution is corrupt/efficient/inefficient, it does not matter as they haven’t got the money after producing anything. With government, people or institutions get “free money” to implement the government schemes where corruption will happen as it is human tendency to “not to care” about something which they haven’t earned; case in point here “free money”, which they get from government and government from citizen by putting arbitrary taxation.
Let’s take an example to understand why “demands or rather “THINGS TO HAPPEN” never get to see the broad daylight and even when they get to see it, the shady part of scheme takes the diver seat and the rest is history. To start with, say government wanted to build a power plant, for building land need to acquired so that plant can be set up. Economist and business houses both states that land acquisition is India is a hassle and it is written by erudite also that “land is often held by small farmers or inhabited by tribal groups, who have neither clear and clean titles, nor the information and the capability to deal on equal terms with a developer or a corporate acquirer”. But that not true at all, Right to property which was diluted and A new provision, Article 300-A, was added to the constitution which provided that “no person shall be deprived of his property save by authority of law”. Thus if a legislature makes a law depriving a person of his property, there would be no obligation on the part of the State to pay anything as compensation. The aggrieved person shall have no right to move the court under Article 32. Thus, the right to property is no longer a fundamental right which it has to be, so that person will be free to sell or dispose his/her land at his/her wish, government should snatch land away from anyone under the banner of socialist cause. Land should be held with his or her owner and he should be free to choose whether to give the land or not, but in the current scenario government takes up land by force and when farmers or owners retaliates they use heavy handed police to suppress the agitation.
Solution to the problem is whosoever it might be, whether government or business houses can directly reach owner or owners can purchase the land on his/her terms and start setting up the plan. If they are not happy with the deal they can reach out to some other place as it happens in normal business practice. When someone did not get a place in a market according to his capacity or terms ;they can go to some other place to put up a unit. Erudite writes “In short, strong growth tests economic institutions’ capacity to cope, and India’s were found lacking. Its land titling was fragmented, the laws governing land acquisition were archaic, and the process of re-zoning land for industrial use was non-transparent.” But misses the point miserably that government should not be in the business of land acquisition but it has to be left to owners to give his land away or not.
Now, coming back to example say that land is acquired and plant is now ready to implementation phase. Government will pump the money and make a plan to setup in certain time duration plant need to ready for operation. But officials who will be looking after the project will get “free money” to initiate the project and to get resources and raw material; will be supplied from local vendors. Local vendors are well connected with politicians for their own benefit and they will either make him submit to officials demand or they will make official agree to their demands. Plant will get substandard material as money which got will be taken away but producing the fake bills of high quality material and delay will happen in completing the task to get more funding to complete the task. Here is the root cause, neither government will bother how much money can be used nor the official will have any issue as it is the free money to work with and if they felt short they can demand more and if demand is not met project will delay indefinitely. In either case here hard earned money of taxpayers in going in vain as government can start a project but they do not know when to stop it. Even if the transparency is present, people will find a ways to get away with and government will never try to privatise the construction because control will go away from their hands. This will become a classic example of catch 22 situation.
Here he writes “One example of a new institution is the cabinet committee on investment, which has been created to facilitate the completion of large projects. By bringing together key ministers, the committee has coordinated and accelerated decision-making, and has already approved tens of billions of dollars in spending in its first few meetings.”, again erudite go in totally wrong direction to give the medicine of fever when person is suffering from heart attack. The root cause of the problem is the government intervention in the business and once government has given right to select or reject or propose solution, it may or it will go in totally different direction because of conflicting interest on individuals. As any government committee will consist of people, who will have their interest first and project will delay in the same manner. These so called intellectual wanted to solve problem by putting more bureaucracy and more government control rather than reverse the policy and giving entrepreneurs liberty to establish something with minimum government and bureaucratic control. They are no better than government mentality of suppressing individuals need like in the case crusader of truth.
Here again a misconception “The government has taken a first step by tightening its own budget and spending less, especially on distortionary subsidies.”; removing subsidies is fine but not letting the industries to flourish is equally bad. The people will get things are higher price like in the case of fertilizers and government subsidies anyway doesn’t help the needy but eaten up by the black market which is by product of subsidy. So in order to help the nation to get its legs back, first need to remove all the red tapes and mind that India is not a industrial nation, industries are very tough to functional because of all socialist labour laws. He again goes on the give the example of Delhi-Mumbai Industrial Corridor (DMIC), which will help in providing the influx of money and in turn will bring employment. What if the cost estimated is enough to make the railways as big as it is proposed, what will the government do, they will pull more money into project. The Free money will take a toll on the project and even if it is completed it will take huge sum of money than expected. Inflation will go higher because government is not a producer, it will put money in income tax pocket and funnel it gain. The burden of this high cost will fall on the shoulders of taxpayers. But that doesn’t even bother erudite as he is a part of government and once a person is institutionalized they want to fix problem with the problem and showcase that even after doing, things are not getting fixed.
In the shorter term, this is what so called intellectual group do with the citizen of country that the interest groups use the state against the public. In the longer term, the state and its bureaucrats rule the roost. In the end, the government bureaucracies expand. Paperwork and soft jobs rule the industry, innovation and competition are eclipsed, and the public suffers from poor product quality and high prices. As Mises’s most fundamental answer is: specialization (division of labour) and trade, which raise the productivity of labour. The higher labour productivity causes higher saving, which makes it possible to adopt more physically productive but also more time consuming methods of production and it promotes further technological advance through the innovation of promoting entrepreneurs.