Talking to economists recently Mr Manmohan Singh , our PM, expressed his dismay and displeasure about funding of the subsidies which neither ensure equity nor the efficiency to meet the objective for which they are meant. He wishes to see continuously renewed committment to economic reforms. He wants regional imbalance corrected and advocates wide spread growth. He thinks that rural-urban and the inter-regional divide should be addressed. Very noble ideas these but under his leadership India has seen concentration of wealth in fewer hands.
Practically his words and the actions seem divorced. The subsidies are really not serving the purpose but why not scrap them. Why not target investment simply towards less developed regions but would the economic reforms will let him do it. Crying for the rural-urban divide and inter-regional divide and also of the economic reforms in the same breath seems childish. If economic reforms are complete than ho the govt. may direct investment. It would be only the economic wisdom that would be guiding investment.
There is however some thing that can still be done and the twin objective as he spelt out may be achieved. The economic reforms do not take away govts’ taxing authority. The economic reform also call for the free pricing . We all know that the keeping the petrol and diesel prices constant inspite of higher crude prices may not be the agenda of economic reforms also cheaper fuel will be helping the rich and not the poor. Why then simply not free the energy pricing and tax it more heavily for govt. spending and lower the taxes on goods and services used by poor and rich alike. If the petroleum related prices would go up the manual labour would be at a premium and wages down the line would improve. Here is really empowering the poor for he also has two hands and two legs and is willing to use them unlike the rich who have them but won’t use. The cyclist would then not go over to buy m/cycle but would buy a house nearer to job site. The rich would not go for vacation to long distances at drop of hat. The energy would be more rationally spent. Pollution will be taken care of. Of course the stock markets and the company profits will see some down ward turn. Rich-poor and rural-urban and regional divide would be less prominent. The PMs coveted goals would be achieved. The question is whether he will stand up to it or harp only on Sonia tune of no raising the diesel and petrol prices.