1.RBI's Interest Rate Conundrum: Despite high food inflation, the Reserve Bank of India's reluctance to lower interest rates highlights a complex economic paradox, impacting various sectors differently.
2.Dilemma of Agricultural Policies: The government's hesitation to increase minimum support prices for essential crops like pulses and cereals reflects a broader dilemma: balancing the interests of farmers with the concerns of the larger population and the economy's growth.
The Reserve Bank of India has refused to bring down the interest rates consecutively for several quarters. This is because food inflation is very high particularly of pulses, cereals and vegetables.
It is in this context we must see the government's obstinate refusal to increase the minimum support price for the pulses and cereals.
For long it has been the impression of many humanistic economists not sold on the dubious benefits of reforms, that Indian economic policies are mostly designed for the benefit of just middle and upper class people comprising some 30% of the total population. This population segment includes government officials and pensioners, white collar job holders in private sector and public sector, owners of corporates, contractors successful politicians and professionals like doctors, chartered accountants, lawyers, architects and the owners of upper crust of the medium scale industries.
It is this section of people who are contributing a large chunk of both direct and indirect(GST) taxes of the government. Farmers who produce serials, pulses and vegetables do not pay taxes and on the contrary look for sops from the government.
As demanded by the farmers, the minimum support price which should consist of input costs, labour costs, opportunity cost of their lands plus 50 percent on all the costs put together, as recommended by Swaminathan Committee, is increased for pulses and cereals, then that will increase the living costs of the non-farmer poor and reduce the disposal income of the huge chunk of lower middle class people who form the majority of the vote bank and will adversely affect the tax income of the government.
This means less resources for the government to allocate for big projects which ultimately help the contractors, corporates, Government employees and others mainly politicians.
So in this model of economy characterized by privatisation, liberalisation and globalisation, by its very nature, only a small segment of people tend to benefit and their incomes increase regularly and some of those who are at the helm, their incomes increase exponentially like that of the corporate honchos and owners.
While 70% of the population who produce and work for farms and feed the entire country, their incomes have been stagnating for the decades irrespective of which party was in power and this explains the death and suicides of a large number of farmers and those whose incomes precariously depend on agriculture.
In this scenario, the three agriculture Laws that the government thought of bringing about to hand over farms to corporates would reduce the farmers to further penury and make them totally dependent on the corporates and corporate friendly Government policies like ever burgeoning gig workers in informal sector without any social security and job security and much worse without any feeling of independence; almost akin to slavery.
The paradox is that increase in the mimimum support prices will increase the farmers income marginally without contributing to tax revenues of the government and the incomes of the 30 per cent of populace who are enjoying cheap food will come down and that will definitely bring about equality vis-a-vis 70 percent of farmer population. But overall growth in the country in terms of GDP will come down posing a threat to the image of the top political bosses and deprive the corporates of another milch cow, the farm produce, which they can sell at exorbitant prices in the guise of value addition. The last process has already proved beneficial through corporate food stores.
The idea behind the government's policies to corporatise farmimg would definitely bring higher growth provided it is possible to absorb the farmers to be displaced by corporate's take over of the farms. Such relocation of farmers in other sectors is well nigh impossible as the establishment of new industries for the purpose cannot keep pace particularly at the present times of global restrictions on pollution such industrialisation will entail.
So the only solution to this problem is to have an economic model that is fuelled by the self sustaining villages where incomes will be enough to sustain the lives of the people while providing employment to all with little damage to the environment. With the existing new technologies it is quite possible. Our country may not boast of becoming 5 trillion dollar economy but people will be very very happy and will definitely vote for BJP or any party which supports this kind of cyclical economy.This can be done without disturning the present framework of urban based service and manufacturing sectors.
But no party is willing to do that because all the parties get their resources from the corporates who do not want any change in the economic model running the Indian economy as this will undermine their supremacy and will make them insignificant and deprive them of the luxuries and the neo-feudalistic control they are enjoying at the cost of sparsely remunerated farmers and farm labour of the 70% of the Indian population.
These exasperatingly depressive conditions should make 70% of the population to rise in revolt. It is not happening because of the clever policies of the governments during the last 7 decades which by providing palliative measures(read social doleouts) to asuage their distress from turning into revolt coupled with the suppression of tany kind of revolt arising here and there in the country and also the shutting the voices that promise better human and civil rights with egalitarian existence possible in the decentalised self sustaining and mutually aiding economic units.
The foregoing exposes the rob Peter to pay Paul syndrome of our economy and the lack of courageous leadership despite hefty chests perpetuating their suzerranity on inessential non-economic issues.
Dr M H Prasad Rao
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