Sorry, I Beg to Differ Mr. Prime Minister

 Sorry, I beg to differ Mr. Prime Minister.

Prime minister, Dr. Manmohan Singh in his new year message to the nation acknowledged corruption and vowed to personally work to provide an honest and efficient government.  This generic and assuring statement by the head of the state cannot be an issue of debate or something to blog about, although one might have serious doubts about the possibility of India getting an "honest and efficient government" in his leadership, especially after what happened in the Rajya Sabha on December 29, 2011.

In this new year message, he outlined several challenges facing our nation.  The first challenge was that of livelihood security.  His government thinks that by providing minimum employment and access to food (by giving food subsidy), they will be able to address it.  Many believe that if some of these subsidies are given, these challenges could turn into even bigger problems and could cause severe damage to India’s fiscal condition.

For instance, take his own views that he expressed in the month of November while returning from the SAARC summit in Maldives and I quote, "further subsidies can only aggravate the budgetary problem, and if the budgetary problem gets aggravated, inflation will again raise its ugly head."  His government is coming up with another gigantic subsidy in the form of food security bill even before reducing the oil subsidies as is desired.  What is the logic sir?

It seems there is no game plan to deal with the oil subsidies either.  Oil minister requests people to voluntarily stop taking subsidy on cooking gas.  Sounds funny.  Today, every luxury diesel car is fed with subsided diesel.

Experts believe the food security bill expenditure will need 6,00,000 crores for three years.  This bill could push the government into bankruptcy and India could face problems, which some of the European countries are facing currently.


The message further says that he is concerned about fiscal stability in future because our fiscal deficit has worsened in the past three years. This is mainly because we took a “conscious decision” to allow a larger fiscal deficit in 2009-10 in order to counter the global slowdown.  That was the right policy at the time. But like other countries that resorted to this strategy, we have run out of fiscal space and must once again begin the process of fiscal consolidation."

On the flip side, recession and inflation have increased the problems of this government.  Its revenues are not keeping pace with the expenditure.  They are unable to implement any concrete reforms that could bring money back into the country.  With these mammoth subsidies and decreasing revenues, how are we going to achieve fiscal consolidation?

With no fiscal stability, the government’s borrowing is going to go up in the coming days, which could lead to shortage of money in the financial market and that could give rise to rising interest rate scenario.  That will affect our banks with rising NPAs, which may have a disastrous impact on our country's financial health and indirectly on our people.  Being a well-known economist, he is aware of all these facts, but he is allegedly accused of undermining the post of the prime minister with decision making power being in the hands of Sonia Gandhi.

Since the UPA-II came to power, it has been facing various charges of corruption and media has played an active role in bringing to light these scams of serious magnitude.  In his message, the prime minister, in a way, blamed the media by saying, "A revolution of rising expectations fostered by the extraordinary reach of the electronic media and the connectivity provided by new social networking platforms has kept governments around the world on their toes."  Toes? really, the Indian Government was napping when the 2G, CWG, and Adarsh were exposed.

The political equations have turned to worse with aggressive regional parties trying to put pressure on policy decisions (FDI in retail, insurance and pension).  Now alliance partners have started to undermine his authority.

All these issues and forthcoming general election leave very little room for Dr. Manmohan Singh to provide an honest and efficient government.  He and his party may win next election, but he may do no good for India.