The economics of politics by Dr Mohammad Manzoor Alam (August 26, 2015)

Politicians everywhere are notorious for looking at political advantage through populist actions first and looking at its economic costs later. The PM’s announcement of Rs 1.25 lakh crore Bihar package before the coming elections in the state is a clear example of this short sightedness.

For years BJP has been opposing Congress Party’s penchant for announcing such special packages when they had been in power, particularly during the Indira-Rajiv era. BJP leaders used to complain that only Congress-run governments got it, or those state governments that were in the good books of the Congress-ruled Centre.

BJP, naturally, wanted to abolish this practice. However, the PM has done just the opposite. This looks particularly absurd in the light of the fact that there is no Planning Commission to coordinate and monitor it. The Niti Ayog, which has replaced it, has neither the capability nor any experience in it.

Usually, the Planning Commission was given some indication by the states about their requirements for financial resources, against which such grants were accounted for. Nobody knows exactly how things will work out. In any case, the package politics should have been avoided. Also, the Centre should always take care of the economics behind its politics, a principle for which the government does not seem to have any great use.

Another cardinal principle that the Modi government has consistently ignored is that in politics and diplomacy people’s expectations must never be raised. This government had come to power on a promise of achhe din (good days). The BJP campaign said achhe din ayenge. One wonders whether a riot a day can by any stretch of imagination be called good days.

Also, it is equally difficult for the people to regard exorbitantly high prices of food as an indicator of good days. In his election campaign Mr. Modi got himself photographed amid a flood of onions, suggesting that under Modi sarkar onions will be dirt cheap. The common consumer feels tricked and cheated today as the onion flood has turned out to be a cruel joke.

A few days before Independence Day, a famous columnist had advised the PM not to indulge in bombast in his Red Fort address this year. “Sir, please don’t announce any new big plans and grand schemes this year from the ramparts of Lal Qila,” he wrote. “Please do take care never to repeat last year’s mistake,” he wrote. Mr. Modi, thankfully, did not do it this year.

He offered the advice merely as a well-meaning citizen who had seen the fate of big plans and grand schemes, which mostly were only hyped and paraphrased versions of Congress schemes. None of those are meeting the raised expectations of the people.

How can anyone be happy about barely functional schemes and camatose plans? For instance, people don’t see greater cleanliness as a result of Swachha Bharat. Jan Dhan Yojna is doing even more miserably. It is not moving at all, to the extent that poor people take it as yet another cruel joke on them.

The latest whammy to hit us is the stock market crash of Monday that has wiped off more than Rs 7 lakh crore of people’s money. We cannot put it completely on the Chinese market crash because our economic relations with China are not deep enough to really suck us into the vortex of Chinese crash. We must take responsibility and act quickly.

The UPA did amazingly well even in the middle of global slow down because it had big ticket economists like Manmohan Singh, P Chidambram and Montek Singh Ahulwalia. Arun Jaitely and company are not of the same caliber, sadly. The people expect action, not false promises.

It would be better still if the government takes along people like Manmohan Singh and Chidambram in their effort to stabilise the national economy, forgetting Sanghi arrogance for a while in national interest.


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