"I hold it to be the
inalienable right of anybody to go to hell in his own way. "
-
Robert Frost (American, 1874-1963)
Word for the day
Lackadaisical (n)
Without interest, vigor, or
determination; listless; lethargic.
(Source: Dictionary.com)
Malice towards
none
Wonder, when non-congress
parties will stop citing non-performance of Congress in last 60yrs as a defense
for their non-performance!
Irony of middle child - II
The decision of CCEA to hike interest subvention for EWS and LIG
housing is a most welcome. I am happy to see that the government is thinking on
the lines which I truly believe to be correct.
Now continuing from yesterday (see here),
I believe that the focus of policy should be on providing escape velocity to
the middle and lower middle class households. Moving this tremendous mass of
people to a higher economic strata will provide Indian economy the critical
demand base that is necessary for higher growth on sustainable basis.
Once this mass enters the virtuous cycle of "more income-more
saving-more consumption-more investment-more income", the potency to
address the upliftment of the bottom of the pyramid may increase exponentially.
In post independence period the policy focus has always been away
from this most potent section of the society. Both monetary and fiscal policies
have focused either on the:
(a) miniscule top end of
the spectrum that has led to perilous widening of socio-economic inequalities
and added little to the sustainability of economic growth. In each business and
economic cycle we see this section coming under stress rather easily, seek even
more assistance from the government, and bring the financial system to the
brink; or
(b) the large, vulnerable
and politically relevant bottom of the spectrum. Historically, most of this
effort has occurred without building robust delivery mechanism; has been based
on ad hoc policies driven by electoral considerations; and has led to
dissipation of scarce resources. In recent times, efforts have been made to
improve delivery mechanism through financial inclusion and use of technology
(UID) etc. This effort will certainly bear fruit in future. But if adhocism and
electoral consideration continue to dominate, the results may still not be
optimal.
The consequences are for everyone to see. None of the segments is
satisfied.
The question is what is the way out. In my view, a combination of
the following could work:
(a) Minimize capital
controls. Allow foreign capital to move freely in all sectors. Make policies
stable, predictable and friendly. Support competitive domestic businesses to
grow and let the uncompetitive domestic businesses to fail.
(b) Provide necessary
escape velocity to the middle and lower middle class households by leaving more
cash in their hands for consumption and investment. High quality public health,
education and transportation would help in a big way. Subsidized housing and
lower taxes are must.
(c) Make a comprehensive
long term sustainable support system for the bottom of the pyramid. Improving
delivery mechanism, and targeting subsidies is quintessential. Make a
legislation that prevents a political party claiming exclusive credit for
whatever it has done with the public money. Let them claim credit for what they
have achieved through spending from party funds. This may take electoral
consideration out of fiscal policies.
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