Friday, June 08, 2012

Great Economic Paradox

Indian Economic Policy is very strange. On one hand, taxes are being raised every now and then and on the other, subsidies are being doled out just on the pretext that poor cannot pay the high prices or taxes. There are numerous interesting contradiction in Indian economic policies.

It is a fact that central and state government fill their coffers from big taxes on petroleum products. And the consumption is increasing every day. But still whenever, prices are raised, central government gives pretext that hike was inevitable as oil companies were making losses and state governments carries out agitations against the hike. When everyone is so concerned, why cannot these governments at least shield the hike against taxes. Just think, state governments demand roll-back in prices, but cannot roll-back the VAT hike just because it needs the taxes. Why they do not understand that roll-back will also take away the VAT hike, and this is the least support common man needs. Or is it all the game of politics to milk the common man. It is no wonder that prices raised anywhere has overall impact on the economy. So poor are not shielded anywhere.

Another aspect is that the expenditure by government on services per person is decreasing, while the revenue per person is increasing every year. Since the advent of privatization, government is getting revenues from every sector, whereas earlier they had to make investments and do spending and most of the time those were in losses too. So overall it has been a benefit for the exchequer. Almost everything is being sold by government, and the only effort which they have to spend is to sigh then contracts. There are very few recruitment done. So you have almost same number of policemen/fireman/government staff manning ever increasing population.

All the highways are being constructed on BOT, where private investment is done and private companies charge tolls to recover the investment. Even their, government has their share of revenues. No big investment on railways with talk of it making losses. I am sure if there is private participation, travel will become cheaper even with generating profits. The tariffs by public telecom operators like MTNL and BSNL are higher than private operators, and still public companies are making less money.

Then the government raises service tax, VAT etc bringing more services under its ambit. Instead, if some effort can be spent on curbing black money, taxes will raise exponentially. What do the government needs money for. Or is the money needed by politicians and their well wishers and they do so by looting the middle class.

Every year government spends lakhs of crores of rupees on subsidies. And this gives them the pretext to sell sub standard material to them. A few years back, Indian government has said that poor man needs 30Rs per day to make ends meet. Why cannot government does away with subsidies and provide a card to common man with a fixed amount of benefit for a year? And with that will go all the pretexts. And with that, our country will save huge money. And will also do ways with sub standard materials.

If only there was a will to do something rather for country rather than the will to fill their pockets. Indian would have been a developed country by now. Great Indian Economic Paradox is bleeding the common man.

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