Foolhardy opposition in India

Another Bandh, another attempt to derail the economy by foolhardy opposition parties who take their name literally and do little to act constructively. India was disrupted coz Mr.Advani and his bunch of  jokers and pokers believe common man is affected by price rise and increased burden by the deregulation of fuel prices. Agreed, even the government agrees to this, everyone agrees to this. What everyone also knows (even a grade 10 student would know this) that an expansionary monetary policy and supply side pressures (deficit monsoon and global economic environment) leads to inflation. This was expected and RBI and other stakeholders have already expressed their views on reigning in inflation in a phased manner by raising interest rates gradually to prevent stopping the economic growth engine.

We are coming out of extraordinary times and are fortunate to be unscathed and relatively insulated from the global events. What Mr.Advani and his sundries would also agree is that PIGS (Portugal, Italy, Greece and Spain) are facing debt crisis because of their excessive spending and high budget deficits. Their sovereign credit ratings (both for local and foreign currency) have gone for a spin and the spreads on their government bonds have reached alarming proportions. Global Investors have placed countries with high deficits and high GDP/Debt ratio on a ‘ratings watch’. G20 couldn’t agree less and all its members have vowed to half their budget deficits in three years and encourage fiscal austerity measures.

India is facing a fiscal deficit problem, thanks to subsidies (particularly oil and fertilizer subsidy), leakages and inefficiencies in implementation its public sector spending. States add more than a couple of percentage points to the overall fiscal deficit figure of the centre. Deregulation of energy prices (particularly oil) is at the heart of the fiscal deficit problem and the same was proposed and attempted by NDA when it was in power. So why oppose it now? Isn’t it an example of taking your name (opposition parties) too seriously. Politics is all about populism and its easy to fool the common man by tinkering with what bothers them in the short term (price rise) and leaving the long term prospects (economic growth and prosperity) in a quandary. A bird in hand is worth two in the bush they say; but this analogy is irrelevant if the two in the bush are mating and increasing their long term supply.

What was required instead was a demand from opposition parties to ask the government to explain and come clear on the steps it is willing to take to rein in price inflation (particularly food inflation). What was also required was asking for an explanation on the modus operandi of pricing mechanism by oil marketing companies after deregulation. Also the opposition could have asked from the government to explain how it is securing the energy needs of the country in the long term particularly with an eye on aggressive global acquisition of energy assets by China.

 Economies around the world are like fast running trains. The developed economies are trains that are way ahead of emerging and less developed economies though the developed economy trains have recently started running slowly. The emerging economies like China and India are the trains that are fast catching up with the developed economies. China is expected to join the league of developed economies in about 10 years and India is expected to follow soon. But if the passengers of our train keep pulling the chain at the drop of a hat and create ruckus, the train with a lot of pit stops will fail to gain its top speed and the catch up effect will get delayed.

Mr.Advani enough of your Rath Yatras and Bandhs, the common man is least interested in your circus. Get real and provide a constructive opposition. Else India will be a looser like you, always a contender for the top post but never getting to occupy it.  

Loss of business due to Bharat Bandh – Rs.10000 Crores (CII Estimates)