Manmohan, The prince of inequity

Udayan Namboodiri is another good columnist on Daily Pioneer to go along with the likes of Swapan Das Gupta, Kanchan Gupta, Sandhya Jain and Chandan Mitra.

The Pioneer > Online Edition : >> The prince of inequity

“We cannot save people from inflation if we follow all along populist fiscal policies”. - Manmohan Singh

Singh had held every important economic office — Prime Minister’s economic adviser, RBI governor to Deputy Chairman of the Planning Commission — before the denouement of 1991

Naturally, as the man who has shaped India’s economy for the major part of the past two decades Dr Singh must bear the cross. When the Arjun Sengupta Committee, which he formed under pressure from the Left in the early days of UPA-1, reported that over 394.9 million workers, who make up 85 per cent of the working population, live on incomes of less than Rs 20 a day and that 88 per cent of the SC-ST-OBC and 85 per cent of Muslims make do with not even that, one had hoped that Singh would chart a truly inclusive course. But ‘inclusivism’ is like the original Congress bad-joke: “Garibi Hatao”—it boiled down to Garib Hatao.

In 2009, the Indian Statistical Institute reported that that since 2004-05, Singh’s first year as Prime Minister, rural poverty has grown 20 per cent.

Congress historians will tell you that India's economic growth story started with Rajeev Gandhi and its architect is Manmohan Singh. But as Udayan points out, apart from that blip when he was acting under P.V.Narasimha Rao's instructions, his own contributions to Indian economy have been cruelly destructive.

"Populist" policies like NREGA and farm loan waiver, which he personally has pushed for, had disastrous effects:
- It created fiscal imbalance.
- It pumped enormous liquidity into the system.
- It also increased wage inflation at the rural level.
- It benefited the privileged class of Congress workers through an organized and corrupt form of cash transfer.

The net result is inflation and inequality

The government could control overall inflation by fiscal measures. But the populist schemes introduced a dramatic increase in rural wage inflation and this is now being reflected in food inflation, which still hovers around 18%. Our economist PM's fiscal measures are not having much impact on food inflation and this is more or less expected. He can only hope that eventually the market will stabilize at the new levels. In the meantime, a few hundred million more will be pushed into poverty and the income disparity will increase. He has already overseen the growth of rural poverty by 20% and I predict that by the end of his tenure, this number will triple.

So, if you look at Manmohan's overall record, it is dismal. He has inherited a vibrant economy and introduced large income disparities and pushed millions of people into poverty. Udayan rightly calls him the prince of inequality.