India Needs A Welfare State Not Elite State: Why Slashing Of Rates On Small Savings?
By Dr. Vivek Kumar Srivastava
20 March, 2016
Countercurrents.org
NDA government has reduced the interest rates on small saving schemes Kisan Vikas Patra and others, mainly G- Sec securities and Public Provident Fund in huge manner thereby affecting a large section of the Indian middle class. The government had indicated about such steps in its Economic Survey which was presented before the Annual Financial Statement. The government has charted a path where the neo liberal policies are now becoming a norm. this may be debated whether such policies are in the interests of the common people or not, one thing is explicit that government is keen to seal the leakages as it has clarified in its Economic Survey but the reduction of the interest rates which directly affects the old age persons, pensioners and the people with the low income is not a right step.
Government is keen to take out money from any account of the people of India as in Finance Minister had announced the tax on the withdrawal of money from EPF after the retirement but had to roll back after a big opposition by the people of India. Now this reduction follows the same line of action and the argument. Its adverse effect can be documented in easy terms as the house construction, studies of the children, healthy coverage, marriages of the daughters will all be affected in one or other way.
In fact the Chief Economic Advisers of the GOI and his associates are good economist but bad Sociologist . They have theoretical knowledge about the economic terms and concepts which have been widely used in this year’s economic survey where arguments have been substantiated with the research findings[ picked mainly supporting their arguments] and new concepts as exit etc. have been propounded but they all fail to understand the sociology of the common living where every person even of the middle class have to fight for the meager things due to less monetary capacity. Thus the reduction is failure on the part of the Economic wing of the government of India.
This sociology of common people has been ignored by these Grand economic intellectuals and they have also failed to plug the gaps of revenue loss which if plugged then government would not have gone to take such illogical steps.
These may be enumerated in brief. The government is keen to save the leakages and losses at different level. There is one such grave loss on the spending of the expenses spent on the foreign visits of the bureaucrats. According to Minister’s written reply in Lok Sabha “a whopping over Rs 1,500 crore was spent by various central government ministries on foreign travel during the last three years, of the total of 1,537 crore spent by ministries, a total of Rs 509.91 crore was during 2014-15, Rs 434.94 crore in 2013-14 and Rs 593.09 crore during 2012-13”. (IBN Live, 17 March 2016) In fact NDA government spent more than UPA government if last two years spending is compared. It means there is no emphasis by the government to reduce these spending. It is a common understanding that several visits do not produce any tangible or lasting benefits. More data also shows that there is no reduction in the present government in its spending.
“At Rs 14 crore, the salary and allowances bills of the 65-member Modi's council of ministers have been almost the same as that of the 75-member UPA cabinet. The expenditure of the PMO, though, has gone up to Rs 40 crore in 2014-15, compared to Rs 31 crore of UPA's last year in office.” (TOI, March 22,2015) It means the Modi government has less ministers but their spending is more. Thus per minister spending is higher in the present government. There is huge loss on the parliament disruption in which government as well opposition bath are involved. Today’s government was yesteryears opposition, thus no political party has cared the huge loss due to disruptions. “Each minute of Parliament in session costs approximately Rs. 29,000. The Rajya Sabha works for an average five hours a day, the Lok Sabha for six; a total 11 hours.”
(NDTV, 24 July,2015) On average parliament may function around one hundred days in a year and disruption makes things useless.
There is another area where government is lax. The corruption at the lower level is rampant. Government has failed to check it. Railway is one such area where corruption is much in different forms. Freight corruption has not been checked by the government. During UPA regime a scam of 4200 crore had taken place and the present dispensation is yet to plug such losses. The overstaffing and high bureaucratization brings corruption and losses but government has not succeeded on this count. This lament is common for other departments too.
Why then cut the pocket of common men? If the government is really effective and is really a symbol of good governance then it could keep the rates unchanged and would have contained the leakages and corruption. This policy decision is beyond comprehension and shows government’s in ability to generate revenue from other sources. In fact the way government spends without serious thoughts is really main problem of the governance. As long as the corruption is not controlled and better collection of revenues do not take place ( restrain corruption at this level}; as well the government limits expenses at the executive level, there seems to be no hope for the common people. When CPI inflation rate is projected by the current Economic Survey to ease out to 4.5 to 5 % for the next year if all factors including monsoon remain favorable; the moot point is if factors change or inflation increases due to any reason then what will be the real gain of the individual of old age to have KVP at 7.8 per cent or PPF at interest rates at 8.1% like NSC? In fact even at low inflation the rate reduction is not in the interest of the people.
India needs a welfare state not elite state. The economists of the government must understand the real areas of loss of the government funds and should not attack the small purses of the common people. This is not right politics. The sociology of common people needs to be taken care of. High level analyses are of no use at the ground level where common people operate.
Dr. Vivek Kumar Srivastava is Assistant Professor, CSJM Kanpur University (affiliated College) and Vice Chairman CSSP, e mail-[email protected]