(MENAFN- Khaleej Times) It is useful to be suspicious of alliterations. They are often too good to make complete sense: 'digital divide,' 'Swinging '60s.' But it is hard to resist their contagion, and it is not surprising that the most popular diagnosis in India of the nation's alarming economic plunge is "policy paralysis" â€" the hypothesis that the central government led by the Indian National Congress is too incompetent to pass crucial legislation.
The government has denied that it is paralysed. It has conveyed that, considering its circumstances, it has been at once savvy and humane. What the government has been unable to say is that it knows what must be done but cannot control its enormous welfare spending or take tough long-term economic measures because it does not want to infuriate what might be termed the Greeks among the Indians â€" the rural voters. Unlike the actual Greeks, whose fiscal ways have exasperated some of their European Union partners, they cannot be kicked out of the union. In a way, they are the union.
The evidence that the Indian economy is in terrible shape is unambiguous. Foreign investors are fleeing; international corporations are voicing fear of the Indian government; private equity executives have begun flying economy class; industrial growth has contracted; economic growth has slowed; the happy "India-is-rising" stories have long vanished; the fiscal deficit is large; inflation is rising; and in the last few weeks, the rupee has weakened against the US dollar. So much so that writing this column has suddenly become nearly 10 per cent more lucrative.
Economists and the middle class are livid. They want the Indian government to be far less profligate and populist. How long must they carry the burden of the "Greeks"? The economist Surjit Bhalla, who has begun a newspaper column called "India's Descent," wrote in its first installment that "India's decline" was caused by the "socialist policies" of the government â€" "policies that would embarrass even Hugo Chavez," the populist president of Venezuela. Dr. Bhalla reprimanded the government for the "outlandishly high procurement prices" it pays for goods from farmers and its "wasteful welfare expenditures."
The financial newspaper Mint said in an editorial, "There are two simple things the government can do to revive the bleeding Indian economy: stop interfering in the markets and end the dangerous efforts to create an entitlement society."
It would appear that the problem is clearly defined: the incurable socialist tendencies of some powerful people in the Indian government and the rural class, chiefly in the agricultural sector, whose lives are subsidised by the productivity of the middle class, and who go to vote every time there is an election to ensure that they continue to benefit.
The voter wants immediate welfare; the government wants to be re-elected. Economics would have been such a beautiful idea if only it weren't so complicated by the long term.
The poor extract a heavy price for their votes. The hundreds of billions of rupees that the government spends every year on fuel, electricity and agricultural subsidies, and on the high prices at which it procures agricultural goods, have severe direct and indirect consequences in the form of low productivity, waste and high inflation.
In return for the favours, the voter elects substandard politicians, who are practical men and masters of the short term. High welfare costs in an impoverished country also ensure that the government does not have enough funds to spend on primary education and infrastructure.
There are good reasons why the voters, despite all their grousing, trust the political class more than the middle class and businessmen. For too long, they have been exploited by those above them and treated very poorly. Many of them have been tricked into selling their land cheaply. So now they stand united, ready to break into violence at any moment, making land acquisition for industries and infrastructure complex, expensive and unpredictable.
The politicians, on the other hand, have been far more useful. They have delivered free or cheap grain, inexpensive kerosene and diesel fuel, guaranteed employment for at least 100 days a year, increasingly efficient health care for poor families' children, who are surviving longer and longer, and free hospitals that don't look fancy but do save lives. In this miserly country, the greatest philanthropist is indisputably the government.
When Greek voters go to the polls in a general election next month, they will cast their ballots with an eye toward protecting their quality of life. Rural Indians vote for the same reason.
Manu Joseph is editor of the Indian newsweekly 'Open'
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