2012: Just another bad dream, like the one before
Many talk of the revolution in retail, but governments must be more concerned with revolutions forming on the streets
Mohan Guruswamy Delhi
A year ago, at about this time, India’s GDP was expected to grow at 8.2%. Instead it is growing at 5.3%. A shortfall of 2.9% between hope and reality. In money terms that shortfall translates into approximately $ 53 billion in nominal terms or $131 billion in PPP terms. In terms of Indian rupees, a denomination we seldom use in the rarefied circles of high office, this means a shortfall of around Rs. 2.86 lakh crores in nominal terms or Rs. 7 lakh crores in PPP. That is the “presumptive loss” to the GDP if you want to use a CAG made famous term. If that is what the people lost, the central government’s nominal loss in terms of taxes foregone would be about Rs. 29,000 crores. This year the Government of India was hoping to collect Rs. 6.64 lakh crores as taxes. (And the States would have collected almost another similar sum.) This means the presumptive loss of tax revenue is 4.5% of the budget estimates. Now however small the percentages may appear, these are not small sums of money and India cannot afford to forego them. Add to this the shortfall due to the expected 2G spectrum sale, the failure of the ONGC stock issue, and much lower collections from PSU disinvestment, you are looking at a really huge shortfall in central government collections.
Since interest, salaries and to some extent defence allocations are inviolable, the hit is borne by deep cuts in social spending and capital expenditures. Already our capital expenditure to budget ratio is an abysmally low 9%. Social welfare spending, however little may trickle down, impacts on the poor and needy. Despite what the World Bank and IMF trained cretins in North Block, South Block and Yojana Bhavan say, the numbers of the poor is rising alarmingly. At the time of independence India had about 320 million people. It has that many poor people alone now. It does not matter of the BPL estimates are 30% or 25%. The simple fact is that in absolute terms the number of poor people is on the rise and the various governments have not shown the inclination to stem the tide. We can see the tide in terms of the massive influx of economic migrants into other parts of India from Assam, Bengal, Bihar, Orissa, eastern UP and the tribal regions. Over three quarters of our tribal people still exist below the poverty line, giving them stark choices. Either migrate to the cities or revolt against the iniquitous system. They do both. Yet our middle and upper class seems only focused on the migration of Bangladeshis into India. The establishment can take credit for successfully putting blinkers on us to look in one direction.