PM’s Bold Announcements

Prime Minister Manmohan Singh has taken some bold decisions and which may bring some FDI money into the country and also spur some extra activity in the economy. But to a person who has an idea about the necessity of a wholistic approach based on well thought out economic model for the country over a longer period of time may well understand that there is mix of political one-up-man-ship and some urgent need for action. What has been done is  adhocism of unnecessary kind.

The UPA is only a marriage of convenience and nothing solid policy framework can be expected from them. The country therefore has to suffer for the fractured mandate its voters have preferred. The fault is not entirely of the voters also as the politics of the day does not empower the thinkers and philosophers who can possibly take all angles into account for the maximum benefit of the maximum number, which is a desired approach expected of the democratic system of governance.

Of the decisions, the raising of the diesel price is OK from the angle of the international crude prices and leaving petrol prices at same level through lowering of excise duty is also the right step.  LPG cylinder use limited to 6 in a year by a family at the subsidized price is wonderful for it will help the lower middle class but would not burden the govt unduly. This will pave way for some more attention to other classes which require help. I feel sorry that whole of the petroleum sector is still not being freed from govt control . If this is done, efficiencies in operations of the companies will see about 5% savings in costs. It will also push up use of alternative energy and  will also economize the petroleum use.

The FDI in retail is bad a concept as the extension of the logic will  make the govt think of allowing large scale mechanical farming by multinationals for low cost production. This will be a  disaster for India. FDI in aviation is OK but what should have been done is that specific railway projects should have been allowed to invite foreign capital with suitable tax breaks.

I can tell you that the best reform would have been to redraft the labour laws and introduce some progressive new labour laws which would make a whole lot of change in industrial scene and labour productivity. This is not being done so therefore we can very well assume that heart of the economist Prime Minister is still not into reforming the policies.

There is much more that can be said but for brevity I would like to sign off.



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