http://www.telegraphindia.com/1090717/jsp/opinion/story_11247748.jsp# WHERE THE DIVIDEND LIES - The Union budget has ignored the *Economic Survey*CUTTING CORNERS - Ashok Mitra
In the mid-1940s, the country’s apex bank, the Reserve Bank of India, was still very much a fledgling institution, groping its way around. To improve the quality and processing of data as well as its global understanding of economic and monetary issues, the RBI decided to set up a research department. A few members of technical staff were scraped together from the bank’s operational wings along with a handful of bright young economists and statisticians recruited from outside. They were boxed in an obscure corner on the top floor of the bank’s imposing building on Bombay’s Mint Road and left to their own devices. One afternoon, an out-of-town visitor keen to meet a college-mate, who had joined the RBI research staff, walked into the Mint Road office and enquired where exactly the research department was located. He asked hither, he asked thither, nobody could help him. He was about to give up and leave when a bank clerk took pity and called him back: “Well sir, you take the lift at that corner, take it and go to the top floor, step out of the lift, walk twenty paces to the right, then turn to the left, walk another fifteen paces from that spot, now turn to the right and you will come to a biggish room where you will find a cluster of young people gossiping and occasionally reading newspapers. May be they are the research department.” In other words, in that era, nobody took the research department of the RBI — or for that matter, that of any other official institution dealing with economic, monetary and financial matters — seriously. More often than not, an outfit of this kind was the object of banter and ridicule. The members of research staff were at most tolerated, few believed they could make any substantive contribution to either policy-making or operational efficiency. A sea-change has taken place since Independence. Economics is now a holier-than-thou profession. Most ministries dealing with economic affairs now recruit sophisticated research staff with formidable academic credentials and are equipped with state-of-the-art computers. The state governments have not lagged behind, nor have banks and corporate firms. The country’s prime minister himself had once headed the government’s economic research division. Senior economists with, for instance, the ministry of finance and the Planning Commission are at present a much-sought-after, high-profile species. They produce reports, in season and out of season, on the burning economic issues of the day. Their advice, admonitions and prognoses are supposed to be major inputs at the disposal of policy-makers, including ministers. None dare keep them at arm’s length. On the contrary, if gossip is to be lent an ear, their sage words uttered every now and then have a considerable impact on the movement of share prices in the market. The *Economic Survey* put out annually on budget eve by the ministry of finance is the product of its economic research contingent. This year’s * Survey* has a breathtaking quality. It is seemingly unaware of the grave economic recession — the gravest in eight decades — that has currently overtaken the United States of America as well as Europe. The fact that at the root of the crisis is the greed and venality of private enterprise is of no matter to those who have authored the document. Problems of both economic stability and economic growth, the *Survey* assumes, have a unique solution: globalization and even more globalization; the nation’s fate is to be left entirely to the care of private initiative. It recommends disinvestment, at galloping speed, in public sector undertakings including in the nine undertakings that are making huge profits, the*navaratna*. It pitches for privatization of the country’s railway network and mines. It totally ignores the hard reality that foreign — particularly American — banks and insurance companies are now a thoroughly discredited lot and proven hotbed of corruption and other gross financial irregularities, often necessitating injection of public funds for their survival. The *Economic Survey* actually urges greater scope for their entry into the Indian economy. Those who have prepared the *Survey* are true-blue neo-liberal economists, on the same wavelength as savants on the staff of the World Bank and the International Monetary Fund and other admirers of the concept of global economic equilibrium nestling in American and British academic institutions. The central objective of the*Economic Survey*, evidently in the view of its authors, is not to inform the nation and politicians in charge of its destiny about the economic realities here and overseas, nor to suggest policies and programmes which take into account the substance of these realities, but to indulge in abstract pedantry. Perhaps their product is more intended for consumption abroad: dear friends, please see how much we have learned by sitting at your feet. Even if the *Survey* is not taken seriously within the country, those who have scripted it will have no regrets; as long as their neo-liberal whimsies are duly appreciated — and suitably rewarded — by appropriate quarters in distant lands, their day is made. The preachings and precepts strewn across the *Economic Survey*, have mostly not been heeded in the preparation of this year’s Union budget. The finance minister has charted his own course. On the issue of disinvestment, he has dissembled beautifully: it will all depend, you know, on market conditions. He has not even bothered to refer to the extravagant proposal to privatize railways and mines. There is similar reticence on whether to allow wider opportunities to foreign banks and insurance companies to mulct the Indian economy. Also worth noticing is the spectacle of the finance minister maintaining a certain distance from the fetishism of gross domestic product growth. His airy-fairyness conveys the message that was intended to be conveyed: wait out till the global situation clarifies; meanwhile, no harm humouring the hugely rural electorate, even if this involves some fiscal deficit. After all, in the US, he has gently rubbed it in, the fiscal deficit is almost double of what he has proposed. In sum, the budget is a slap on the face of the wisdom-laden architects of the *Economic Survey*. It is as if we have come full circle. Sixty or seventy years ago, the research personnel of government institutions were considered irrelevant for policy-making because of a general ignorance about what they do. The research personnel are once more being regarded as irrelevant, but because the inanities they produce are now in the domain of full public knowledge and invite derision. Which is all a great pity. The intellectual calibre of those who have prepared the *Survey* is of the highest grade, and yet, their advice and suggestions are out of alignment with the realities the nation has to grapple with. One is almost tempted to ask whether there is not a need to ‘nationalize’ the government’s economic research units. An independent nation cannot afford to carry the burden of a comprador research outfit in the sphere of either science or economics. The budget has exercised its judgment: there is little percentage at this moment in acting as cheerleader for globalization. Class issues are an altogether different matter though. Additional generosity in the form of both higher exemption limits and special exemptions, abolition of surtax, reluctance to raise the rates of direct taxation, disappearance of the fringe benefit tax, and so on, pack a message from the finance minister’s party to the urban classes: please go ahead and enrich yourselves, the budgetary dispensations will act as your security guard; government measures will not be as naïve nor as aggressive as the oddballs in the research wing recommend, but for all that will be immensely more fruit-bearing. Finally, why forget the triple bonanza of the by-now-routine increase, by more than one-third, in the outlay on defence, pleasing, at one go, the patriotic lobby, the military-industrial complex and the commission agents? Nobody will have the temerity to suggest that the fiscal deficit is because of the hefty rise in defence spending. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Green Youth Movement" group. To post to this group, send email to greenyouth@googlegroups.com To unsubscribe from this group, send email to greenyouth+unsubscr...@googlegroups.com For more options, visit this group at http://groups.google.com/group/greenyouth?hl=en-GB -~----------~----~----~----~------~----~------~--~---
