Economics of a Spokesperson

Asis Ranjan Sengupta

Now that the economy of the country is in doldrums, the question is one of strong and knowledgeable Manager who can steer effectively through this ups and downs. As on date the human civilisation is negotiating the threat of a Virus, that has paralysed everything, with obvious reflection on economy. Before this Virus threat engulfed our national life, our economy had been limping, right from the date of demonetisation, through hectic implementation of GST, to the imposition of unplanned Lockdown to check and break the virus chain. In this perspective also, India is but a part of Global crisis.

The Point is, different countries are planning different ways to overcome this stalemate, and executing them in diverse ways, but one thing is in common, and that is boosting up the demand side of the consumers. The Covid Virus requirements of distancing and isolation ,have halted production and service , and that has resulted in slump in demand , as the consumers  have lost employment , business and production suffered , so to recover supply side , the boost up in supply ,must be supported by equal flare up in demand . With that target, all economic powers are pouring money into the pockets of citizens, with the dual purpose of sustenance during the crisis firstly, and boost up the purchase demand secondarily, if these two sides look up, all the tertiary sectors would rejuvenate automatically.

But in our country, all the policy visions are aimed at supply boost up  , the  protection of entrepreneurs and crony capital  appears to get priority over safeguard of citizens , the market operators and sellers  get more  importance than  buyers in the market . Now this poses a topsy turvy chaos, this is simply setting the cart before the Horse. The basic knowledge of macroeconomics can expose the hollowness of the policy. The point may be briefly explained with reference to the latest 20lac Crore revival / relief package, announced by our Finance Minister, experts have shown that the actual input is meagre 2 lac crore, which is nothing. Major part comes in the shape of new investments, and credit proposals, which may not at all take off, in absence of adequate market demand, and subsequent demand for fresh investment or Credit. This is like a vicious cycle, no credit or investment demand as there is no consumer demand growth or rise and no boost in demand, as there is no purchasing power in the hands of the buyers. So, what to do? pull in front or push from back. The simple solution is first push from back, and then the pull from front will gain momentum, and, start rolling smoothly. After a certain stage, no more push will be required, the wheels will roll naturally, without artificial effort.

The theoretical issues here is one of conflict between two theories. Whether to empower the people to empower the market, or to empower the few market players or operators, to strengthen the market. obviously, superpowers are maintaining a balance between the two, and developing or poor countries like us, follow, the first option, as, given the population size, ours is a big market, we only need impetus to rouse the sleeping demon, that will look after the market, and that reawakened  market will more than compensate the operators.

The ‘Market is supreme’ theory of Neo-classical economics, as founded by Marshal or Ricardo, suffered a setback in 1930 s of European Great Depression, So the Keynes’s theory of full Employment, occupied the centre stage. According to British Economist Keynes, Market cannot be allowed to rule supreme, in contradiction to Friedman, the American Economist, who advocated, free and unregulated market, Keynes, advocated a regulated market. And formulated theories in favour of , Government intervention , and impetus ,to the market ,particularly , in time of crisis , known as ‘ initial push ‘ ,in the shape of Government expenditure and investments . Later Economists like Samuelson , floated theories  of Development Economics , that take  care more for welfare of people , at the cost of high Taxes on Corporate houses . After the fall of Soviet Russia , and end of cold War , the Neo Liberal Economics , again gained importance , as China also embraced Capitalist path ,in the name of ‘ Marketing socialism ‘ . But 2008-9 global crisis exposed the hollowness of unregulated liberalised, Globalised Economy again. and at this stage, the Economic visions of French Economist Thomas Pickety, or Prof. Amartya Sen, who always took up case in favour of equitable distribution of wealth among all the mass, gained importance. And, curiously, all the big economic powers now, are again going back to this model of mass welfare economics, as much as possible, to contain mass unrest. Let us take the example of Real estate sector and explain. A lot of newly built properties and apartment, are lying vacant and unsold. due to lack of demand from purchasers, why? because, unemployment is all time high, no certainty of existing employment. Trade and Business on the verge of collapse, Production houses rolled down shutters, the prospects are bleak, no faith in economy, no hope for future ambition. In this situation, who is going to purchase?  So, what is needed first, is to create employment, ensure stability, restore faith of purchasers, only then the loss of Promoters can be compensated. But what our policy makers are doing is, they are formulating, stimulus packages for promoter’s loss make up. That is putting the horse behind the Coach. It cannot pull, the pullers are put on the back, whereas they should have been in front. Moreover , another major drawback of our policy , is  to put the private enterprise in the driver’s seat to pull out of  crisis , wrong idea , it cannot , never happen . Govt enterprise, and investment can change the situation, as initial loss has to be borne, and no private sector would bear it, nor Banks or financial institutes can bear it commercially, but Govt and only govt can, and have to. Another suicidal approach, is to sell out or so called ‘Disinvestment ‘of public properties and establishments. When Private Sector is ailing, and need stimulus, who is going to buy losing concerns? This is simply wrong prioritisation. On the contrary, loss making private enterprises, that are suffering from fund paucity or management failure, need immediate nationalisation, to make them viable again.

 Thus, in India, we miss that pragmatic approach. That is why, so much importance on institutional credit, when market position is not conducive to credit dispensation. To minimise the Bankers risk, Madam Sitaramanji, ensured the Bank men to go ahead fearlessly, without apprehension of adverse action. Bank people know, same encouragement and assurance was given by Congress Govt also, but when loans go bad for obvious reasons, beyond guess or control of lenders, the worker or petty officer is held liable, face action. The situation can be changed, there are many other modes of putting money in to the pockets of the common people. Nobel Laureate, Abhijit Vinayak Bandopadhaya, has even suggested to print money, if necessary, to augment supply of money, and boost up demand, without caring for inflation, and also massive public expenditure, without caring for Fiscal Deficit, for the time being. Those aspects are secondary, and can be taken care of at later stages, after recovery. There are other means also of raising funds to speed up expenditure and subsidy, like floating of Govt bonds etc., But nobody is there to pay heed to. The policy makers have no experience, except belonging to such spurious organisation as ‘Swadeshi Jagran Manch’ as orthodox peudo activists.

Our Finance Minister, is a qualified student of economics, and she is supposed to understand the secrets and mysteries of macroeconomic tools, but her policy directives, sadly lacks that vision. That takes to the bitter truth that , she had a qualification of economics from a premier institute ( JNU ), but she left the country , and spent long years abroad ,without any link with studies, research or culture of her subject of academic study , thereby losing track of the developments in  that dynamic subject , her basic knowledge gathered dust and  rust . After her return to mother land, strangely, she got associated with the Hindutva politics, much against her family background, and no leaning to Ram Cow, Muslim and Pakistan brand ideology. The fact is BJP, at those initial   days had no full time, fluent educated English speaker, in their fold. So curiously this South Indian Brahmin Lady got the job of BJP English Spokesperson. She became a professional spokesperson of BJP party, on any topic, anywhere. This spokesperson existence became everything about her personality, and she never contested or won any election, after 2014, BJP brought her to Upper House along with Arun Jaitley.

As on date, BJP has no economist in their connection. Prof. Jagdish Bhagabati, the Gujrati Economist at Havard, was a strong critic of Congress Economics of Manmohan Singh, and had hot debates with Amartya Sen, another Havardian, on the course and prospect of Indian Economics. After 2014, two students of Profs Bhagwati, Arvind Panagharia, and Arvind Subrahmanium, were deputed to India as chief of NITI Ayog (after the abolition of Planning Commission) and Economic advisor. Quite obviously Raghuram Rajan, a student of Amatya Sen, was shown the door. But since the days of Note Ban , the difference grew , and by 2017 to 2019, both Panagharia and Subrhmanium  left back to America .The other two stalwarts like Urjit Patel , who took over as RBI Governor, after Rajan, and Viral Acharya , who joined as  Deputy Governor of RBI , also , submitted resignation , and fled back to America .  So RSS think tanks like Gurumurthy , a flop Chartered Accountant , and Aswin Mahajan , a share market player ,whose only experience is belonging to a spurious organisation like ‘ Swadeshi Jagran Manch,’ as orthodox activists,  along with Saktikanta Das , the ex-bureaucrat, with a History  qualification , as RBI chief, whose knowledge of Central Bank mechanism does not stretch beyond childish ‘Rate Cuts ‘, which is a discarded instrument globally ,for having  no impact on economic  revival  ,  are left to  run the show. As poor Managers, they are trying to put up a grand show, but quite obviously with none or more negative results.

In this background, Arun Jaitley died, Piyush Goyal was not that much to the choice of RSS, but in the meantime, the Rafael purchase scam came to forefront, and BJP needed one insipid personality to face the gunfire of the opposition, and someone to defend the indefensible with assertiveness. So, this Nirmala ji was put on trial. She faced all fireworks on the stage, and Modi Shah, with RSS, managed the Court and other aspects from the wings or dressing room. And she passed the test successfully , her only failure was that the vital documents  of  Rafael , exposing the scam , got leaked from her ministry , that is why ,  as FM , the first thing she did , was to block the entry of Press.

So Piyush Goyal , was removed , and this Sitaramanji , who passed as Defence  Minister , was put in to finance portfolio , again in the same role of defending the indefensible , and justifying the unjustifiable , the policy is framed and  pushed by RSS , her only job is to present that blindly , from Budget  to revival package , the same story of speaking in powerful  fluent English , and forcing anything given to her on stage . She is not responsible, for formulation, implementation, processing, all those are taken care of by RSS from the back stage. So do not blame her, all she presents as economics, is but a presentation merely, no Fiscal Management or Economics.  It is the spokesperson’s economics, a new genre.

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Jun 10, 2020

Asisranjan Sengupta

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