Aruna Roy

There are already reports in the newspapers that the Employment Guarantee Bill is watered down. There is also the letter of Aruna Roy and her colleagues in their letter to Sonia Gandhi on the Right to Information (RTI).

There is a sort of old-fashioned orthodoxy surrounding the PM’s coterie, if we can so use the term.  The PM/FM and the Planning Commission Deputy are giving clear signals (we haven’t seen anything contrary to this view) that strict fiscal deficit control is the very basis of ensuring a high economic growth rate!


This, we dare say, is a false view! Also, there is again a very superficial talk in India about comparing our economic growth with China’s.  China is making, say, 10 per cent growth while India is struggling with a 7 to 8 per cent growth.  Mr.P.Chidambaram must know that he is a plain advocate of some persuasive arguments.  That is all.  Neither the PM is engaging himself in much public education!

As Prime Minister he is duty-bound to explain the rationale of his economic programmes.  People have given him the benefit of doubt, but he is also a thinker and as such people would be greatly encouraged to give him unlimited support and would leave the burden of lifting them out of the poverty traps and other economic ills if only the PM is forthcoming with his educated guesses at least.

Are we making a point?  We like our readers to respond. Luckily, as we are writing these lines we saw a provocative newspaper column by a distinguished economist, Prof. Amit Bhaduri who had touched upon the same points we have raised here. He says clearly that there is no wisdom at all to believe that the IMF-dictated formula of adhering to a strict budget deficit figure and employment generation through Keynesian type public works programmes.  He says in fact “there has never been any systematic statistical evidence in India either that a larger budget deficit results in higher inflation.  So the link between budget deficit and inflation tends to be more imaginary than real, and for good reasons!”

He cites enough statistics of excess capacity in sectors, cement, steel, and transport and therefore “real investment for public works can be undertaken”.  This Keynesian formula is well-known.  The fear of inflation is unfounded, for “a big budget deficit by pumping more money into the economy would raise prices only if goods and services do not expand proportionately”. As the distinguished economist points out there is this excess capacity in crucial sectors.

And also, we have to see what the election promises would lead to.  Unlike China, whether you have 10 per cent growth or not, the Indian electorate would throw you out of power if you don’t the aspirations of the poor voters!  That won’t happen in China.  So, the comparison to China (even the PM does make such comparisons) is really irrelevant and we have to avoid.  Our economists can’t be trusted for they change their positions very quickly, be it World Bank/IMF or Marxist positions!

Jean Dreze, the economist and one on Sonia Gandhi’s advisory council had warned: “This watered down version defeats the purpose of the employment guarantee act”.  The draft bill as given by the concerned citizens and revised by NAC “had been extensively reworked by a bureaucrat who is anxious to minimize the responsibility of the state”.

Who is the bureaucrat?  Can he ensure that this government can be saved by such exercise?

Image Source  : word.world-citizenship.org

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