Friday, September 21, 2012

PRIME MINISTER’S ADDRESS TO THE NATION Dated 21-Sep-2012 - An Analysis - The Pluses and Minuses



Dated 21-Sep-2012

The first thing that must be appreciated about the address of the Prime Minister, Dr.Manmohan Singh to the Nation at 8 PM on 21-Sep-2012 – is the very fact that the PM chose to address the nation on the measures that his Government has just introduced. One would like the Prime Minister to be addressing the Nations more frequently than this. 

In fact, a Monthly address on issues facing the Nation would be in order. If not as an address to the Nation, it can be a monthly Press Conference. 

A Press Conference will not be a monologue; it will not be a one-sided affair like the Address to the Nation. There would be questions and answers, and some of them will be not very easy to handle, but such uneasy questions do need to be answered. On the other hand, an address to the Nation, though welcome in itself is not a substitute for a press conference, where the PM addresses the people, takes their questions and answers them too. Having said this, it is still a welcome thing that the PM chose to take the nation into confidence. This is sure to generate further dialogue on the subjects covered by him.

The second Point is – On all issues which the Government introduced as REFORMS – there are differences of Opinion among all Political Parties. Many of them will object to the very Nature of the REFORMS. Do they really qualify to be called as REFORMS at all? There are serious differences on each of the measures introduced by the Government. Also, the TIMING of some of the PRICE RISES proposed and threatened to be proposed shortly – seems NOT GOOD AT ALL. With a DOUBLE DIGIT FOOD INFLATION and a NEAR ZERO GROWTH staring the common man in the face, are the measures introduced by Government, the LAST STRAW on the POOR MAN’S BACK? This question will keep rising in every person’s mind in future – if INFLATION happens to gallop from the current High levels to Higher levels?

Is there any one measure proposed to arrest the FOOD INFLATION on one side and stimulating Growth in the manufacturing sector on the other? The RBI has placed the ONUS SQUARELY on the Government to adopt fiscal and administrative measures to REDUCE FOOD INFLATION. When will this Urgent issue be addressed? This is a question being asked by many.

These measures are much more urgently needed and – the PRIME MINISTER will need to concentrate his attention on these measures too immediately. If this is done urgently, the other measures like FDI etc will receive greater acceptance probably.

The timing of these measures coincides with embarrassing revelations on COALGATE – as pointed out by almost all Opposition Parties. It is unfortunate that the Opposition Parties failed to bring ALL RELATED, RELEVANT FACTS into a discussion in Parliament. Even if UPA was unwilling, it was incumbent on OPPOSITION to insist on discussion. But, the Opposition gave the impression of running away from the DISCUSSION in Parliament. The PM therefore need not discuss COALGATE  before the Nation – before he discusses it in Parliament.

The Government might very well survive this shock REFORM treatment to the Nation – given the inclination of various Parties not to side with BJP, and the BJP’s own adamant clinging to its SUICIDAL LINE OF HINDUTVA – for no earthly Benefit whatsoever.

Individuals and organizations tend to have some survival Instincts and suicidal Instincts. For Congress – the suicidal Instinct is proving to be its track record of SCAMS and CORRUPTION. Each scam is becoming bigger than the previous one. There is no way of ignoring them. For BJP, it is its HINDUTVA SLOGAN – which is of no earthly Use whatsoever for any Political Party in India. By dropping the slogan, heavens are not going to fall – for the BJP, while potential for much greater acceptance of its credibility among the masses and among other parties will arise instantly.

Congress is unlikely to give up on scams and BJP is unlikely to give up on HINDUTVA. 

Despite all the Noise by BJP and others, it is very difficult – almost impossible – to point the finger of corruption at the Prime Minister, Dr. Manmohan Singh. Inefficient, incompetent, lack of leadership qualities – one may accuse him of any or all of these – but NOT as CORRUPT at personal level. This does not Gel with most people.

Most people will like to believe him as the one bearing this stink of others. India knows Manmohan only as a Great Economist. Even Bad REFORMS may just get accepted by Public, coming from the PM, if he projects them Better and more frequently before the Nation.

Having said this, I think, the Nation must demand not only the views of the PM, but also the views of each of the Opposition leaders in Parliament. There should be strong democratic winds – and these must happen BEFORE  a Bill or Administrative measure is implemented. This should become the practice in future before any major measure affecting the Public is implemented.

Now, Let us briefly look at the measures covered by the PM in his address :

1)   FDI in retail: PM says -it will not harm small traders. India as a growing economy can accommodate both small & big retail. The PM also says that there will be Benefits to farmers from the storage spaces etc to be created by BIG RETAIL. The PM did not deal with the BUSINESS LOSS, if any, to the small retailers, if Big Retail deals directly with Farmers.

2)   Diesel price hike: The PM says that – the actual need is to raise diesel prices by Rs 17, but his government has only increased by Rs 5. The PM says, India still has lower prices than its neighbours.

3)   Diesel for by big Vehicles: PM feels – most of the diesel is used by larger cars and SUVs of the rich and by factories and businesses. He says, Government need not run into large fiscal deficits to subsidize them. Fine, if this be so. But, is this really so? Will state transport undertakings and private buses plying for public transportation not increase Rates and tariffs now?

4)   Reduced taxes on petrol: PM says, Government has reduced taxes on petrol by Rs.5 per litre to prevent a rise in petrol price – as  crores of middle class people who drive scooters and motorcycles will be benefitted and not hit by Petrol price rise. Is costlier Petrol really a common man’s fuel and cheaper diesel a rich man’s fuel?  Is this logic right? Can we not have differential (LOWER) prices for public transport vis a vis the large cars / SUVs running for the RICH, who are any way clamouring for these fuel price rise. Let them pay for it – exempting at least to some extent, the Public Transport.

5)   Cap on LPG cylinders: PM says – this is essential in India’s current difficult economic situation. He says, this will reduce fiscal deficit and will reduce the steep rise in cost of essential commodities. But, does it not directly place the higher cost of LPG on common man now? The logic of 6 cylinders for common man needs more statistical data. A number like 9 seems more reasonable – though still not adequate.

6)   Subsidy burden: PM says - Oil subsidy on petroleum products was Rs.1 lakh 40 thousand crores last year. If these reform measures are not taken, the subsidy burden will be over Rs.200,000 crore this year. But, whether as subsidy on oil products (financed through taxes) or as higher prices for the subsidies, any way, the final burden falls on common man only. Taxes are any way increased annually to finance the subsidies. As taxes, rich man has to pay more and poor man slightly less. This tax money goes to finance the subsidies. But, if subsidies are cut, the burden falls more on common man and less on rich man. It looks like that!

7)   Takes on CRITICS: The PM appealed to the people not to be misled by those who want to confuse by spreading fear & false information. "The same tactics were adopted in 1991. They did not succeed then, they will not succeed now. I have full faith in your wisdom," the PM said. These jibes could probably be avoided – and more statistical Info in support of the measures could have been given. This can open up more arguments and counter arguments from Opposition Parties. The jibes do reflect some justified anger at the Opposition tactics. But, Opposition is bound to come up with INFORMATION  which cannot be easily wished away as misinformation.

8)   Economic growth: The PM pointed out that many European countries are facing severe economic problems and that his Government is determined to see that India will not be pushed into that situation. Europe is of course in turmoil. But, will these reforms ensure better economic growth? If so, how?

9)   PM seeks trust & Cooperation of People: The PM says that -We have much to do to protect the interests of our nation and we must do it now. At times, we need to say NO to the easy option and say YES' to the more difficult one. This happens to be one such occasion. The time has come for hard decisions. For this, I need your trust, your understanding and your cooperation."

On the whole, the PM’s address is a welcome one. With each such address coming from the PM, his own personal reputation in the public mind will GROW significantly. The negative tags attaching to him will fall off very quickly.

We need more such addresses with more details and facts on key issues facing the nation – and they must come preferably before adopting any such key measures, and not after implementing them. Some of the opposition and other view points, which we listen to on these issues are indicated above under each caption briefly. They are also relevant. In fact, on issues like FDI in retail, a mere statement from the PM is not sufficient. A white Paper on how the BIG RETAIL is functioning in various countries, the benefits and disadvantages accruing to those Nations – would have served the purpose much better. If Benefits are larger and disadvantages are lesser, acceptance would be that much easier.

The Nation also needs to know how Food Inflation and LOW GROWTH issues will be tackled by Government. 

But, Government seems to be readying for raising price of sugar. What other REFORM MEASURES will come are unknown.

The Nation will seek to know - HOW WILL FOOD INFLATION COME DOWN? This is the issue raised by RBI. This is the issue hurting common man right now. 

The other side of the coin is –how and when will the HIGH INTEREST RATE REGIME of the RBI come down, back to what it was 2 years ago?

All said – it is necessary to congratulate the PM on his address to the Nation. We may or may not agree with any or all of these measures – but, we will have to concede that the PM has his genuine points and views.

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