Bhavdeep has worked for publications like The Times of India, The Telegraph, The Indian Express, India Today & Outlook. She has authored a book ‘Gurus: Stories of India’s Leading Babas’. She is presently freelancing for several publications -both print and digital
On the domestic front, the challenges ahead make the seven labours of Hercules look like a walk in the park: the agrarian crisis, unemployment, population growth, the ever-present ‘twin deficit’ problem and cash crunch. On the international front, the government must contend with an impending global slowdown and increasingly delicate geostrategic relations.
The chief elements of the farm crisis are: real farm incomes have plummeted, widening the gap between farm and non-farm incomes, price volatility in global markets has negatively impacted Indian farmers even as domestic price discovery mechanisms have failed to evolve, risk-proofing through public crop insurance has been unsuccessful, access to credit is skewed in favour of big farmers, post-harvest infrastructure is weak resulting in enormous wastage and middlemen run the show. All this, against a backdrop of increasing water stress and microclimatic shifts.
The The crisis has been decades in the making and had deepened in the last five years, despite the introduction of band-aid measures. Implementation issues dogged the Pradhan Mantri Fasal Bima Yojana, the common agriculture market (eNAM) and the price deficiency payments scheme (intended to bridge the gap between minimum support price and open market rates).
The Earlier this year, the incumbent government was forced to introduce an income support scheme of Rs 6,000 a year per farm household (PM Kisan Samman Nidhi Yojana). The shift from ‘price policy’ to ‘income policy’, according to farm policy analyst Devinder Sharma, was both an admission of failure and “a tectonic shift in economic thinking”.
The Such is the urgency of the problem that agriculture will have to be made an overriding priority. Solutions such as a per acre subsidy subsuming all other subsidies, a one-time (and never again) farm loan waiver for small debts and radical market reforms including overhauling the public distribution system are on the table, in addition to higher public investment. The pros and cons of each have already been studied intensively. Quick and informed decisions are possible without palming them off on committees.
The It doesn’t take an economist to figure out that government finances are under strain. Collections from GST have fallen short of budgeted targets, while direct tax receipts and disinvestment proceeds are lower than expected. So much so for government revenues. Expenses will be stretched by welfare schemes such as pension for unorganized sector workers, income support for farmers and so on. Meanwhile, the government will keep a wary eye on global oil prices, for fear of sudden ‘shocks’ that may lead to a ballooning import bill and renewed chuntering over the ‘twin deficit problem’. Energy security remains a huge worry that can only be addressed through ramping up domestic production, solar, nuclear and otherwise. In addition, the looming threat of a global slowdown which some pessimists have said will be “bigger than 2008”, is giving economists the heebie-jeebies.
The On the plus side, after several years marked by rising NPAs, credit crunch and excruciatingly slow resolution of cases under the insolvency & bankruptcy code, the Reserve Bank of India is hopeful that the corner has been turned. However, the momentum must be maintained. The sluggishness of private investment remains a great worry and building up confidence is vital, from the perspective of job creation.
The Unemployment has proved as big a challenge as agrarian distress and has just as much political traction. The only quick-fix solution offered so far is filling up government vacancies and creating more government jobs. At a time when state governments are facing an enormous resource crunch and seeking to whittle down rather than expand the size of their workforce, this is clearly pie-in-the-sky. The tourism, health, and education sectors have been touted as potential job creators and the government must examine whether it can increase investment and boost skill development in this regard. Infrastructure development creates income opportunities, so the momentum of the on-going projects must be maintained.
The The elephant in the room for most governments is population stabilisation. Few politicians have the courage to demand pro-active measures, above and beyond contraception, to bring down the fertility rate. The south has managed to do so quite effectively, but the north more than makes up for it! The resulting political tensions between north and south were partially managed by ensuring that the state-wise numerical strength of Lok Sabha seats was maintained, even while delimitation changed the shape of constituencies. For the central government, the problem lies in population-based fund allocation, which has already enraged the southern states.
The Moving on, the ineptitude of public delivery systems and inefficient institutions of governance continue to erode trust in government and political institutions, undermine inclusive growth and deny weaker sections their entitlements. India’s bloated and underperforming bureaucracy is censured the world over. Yet, successive governments have implemented finance commission awards, without enforcing accountability. The much-delayed administrative and police reforms should go forward. At the same time, radical innovations in participatory governance are called for.
The With growing urbanisation and infrastructure collapsing from population pressure, the problem of non-performing urban local bodies (ULBs) must be addressed. Enough research has been done on the link between the financial health of ULBs and the delivery of public services. Mandatory property taxes will go a long way in shoring up the finances of ULBs and enabling them to provide basic services. Residents’ Welfare Associations, too, must be empowered and given teeth, so as to demand accountability from public officials in a formal, structured manner.
The The government must be pro-active in public-facing services; at the same time, it must reduce human interface in areas where corruption is endemic. Disbursal of subsidies is one such area and scaling up direct benefit transfer is the obvious solution. Procurement of goods and services by government agencies is another. Most important of all is the Income Tax department, long regarded as a hotbed of corruption.
The Internal security has been relatively good, with the exception of Jammu & Kashmir and Gau-raksha- related violence. The government must continue efforts to reach a political solution in J&K, while reining in cow vigilantes. On the legislative side, many bills are pending: Triple Talaq, Citizenship and Women’s Reservation, to name a few. These are contentious matters that it will have to address on the floor of Parliament. The cessation of oil imports from Iran, as a result of US economic sanctions, underlined the importance of maintaining the balance of geopolitical relations in the region. Iran accounted for just over a tenth of India’s total oil imports. Of greater concern to India (despite US assurances) is its investment in the Chabahar corridor, which eases her trade access to Afghanistan. The US must be kept happy, but so must Russia, from the perspective of containing the Pakistan-China nexus and the Afghanistan policy.
The International pressure on Pakistan to stop the export of terror must be maintained, through effective juggling of relations between the US and Russia. Insurgency in the region, as evidenced by the recent bomb blasts in Sri Lanka which claimed 250 and more lives, is a matter of grave concern. In addition, continuing close cooperation with the US as a ‘major defense partner’, as also with Japan, is essential in containing China’s regional designs, particularly with Nepal tilting towards China. The latter continues to enjoy a healthy trade surplus vis-a-vis India, despite a reported dip in 2018-19 and this must be factored in.
The Above all, the government must bear in mind the advice attributed to French wit and philosopher Voltaire “Consider that great responsibility follows inseparably from great power”.