Sunday, July 6, 2014

Socialist Orgasm

Since our independence in 1947 till 1991 we had a full time socialist government ruling and ruining our country. Even though we have moved to more market based economy still from time to time we get socialist orgasm. This orgasm not only acts as the feeder stock for our so called self proclaimed great socialist Neta but also becomes the perfect breeding place for corruption and decouples our country from the growth trajectory. After independence our country decided to opt mixed economy with socialistic leaning.

Many may not be knowing that Dr Ambedkar was a very good economist and played a pioneer role in establishing RBI to safeguard India’s economic interest. He was one of the greatest person of his era whose economic knowledge India could not utilized post-independence. Well that may be attributed to his difference of opinion with Nehru. Dr Ambedkar advocated free market.

 Nevertheless the real assassination of our economic took place in 70s. Can you guess what the income tax slab was in 1973-74? It was whopping 97.5 %. Throughout 70s it was more than 60%. So next time if you hear about brain drain and tax evasion just keep these figures in mind. These figures can only be the best breeding ground for corruption.

Nehru started with very few PSU (exact number I don’t remember but it was less than 20) but during 70s (Indiras era) it increased exponentially. Eventually, we have now 250+ PSU. From bread making PSU to steel making PSU government was in every sector, yeah it includes condoms also. The government opened coffee shops too. Yeah that was the socialist India. India gave a slogan ‘’Garibi hatao’’ and 40 years latter still all party use it.

But hey, what was China doing when our government was busy making bread and condoms? China on the contrary was hard core communist country. It faced some of the greatest famine in modern world in late 50s and early 60s in which millions died. Their leader Mao was dead by the late 70s and gen next people where in charge of China. It started economic reforms in 1978. Just compare the per capita income and GDP of China and India till 1970s you will find that both were almost equal. But communist China never looked back and continued its economic reform, unlike us it did not have any socialist orgasm from time to time. Today China has communist form of government following market economics with large number of private players! China is the one of the biggest importer of Porsche!

India is on the brink of stagflation (high inflation and slow growth rate). It is perform or live in the vicious cycle of slow growth for our Finance Minister. Most of us always demand a better lifestyle, transport, connectivity, high salary job etc. But how can we have this? For all this government needs money and that money will come from disinvestment. But hey again most of us have special orgy for ‘’sarkari’’ !  Now lets take an eg; until reliance entered telecom sector this same BSNL was charging 10 times more than what it is charging now. If you want to book a flight ticket the least fare hardly comes from Air India. On the contrary even a poorest farmer from Vidharbh while buying diesel pays tax to the govt and this same money is used to fund this mammoth white elephants. PSU are by the neta, for the neta and of the neta. But again people say that private enterprises loot their employees. I remember during my school days my teacher asked me to come early and seat infront if I wanted to listen the lecture as at the back bench she was not audible. But this didn’t solve the problem, I mean at any point of time at least someone will be sitting at the back! I hope I made my point.

The road ahead for the government is to do heavy disinvestment in PSU and sell out the useless PSU. The government need not sell coffee or condoms. Reduce the PSU to strategic important PSU (not more than 10-15) for national interest that with at least 25% disinvestment and make sure that the fear of private sector exploiting the workers is thrashed. It was our socialist orgasm that in spite of being a great economist our former PM gave 400cr to a PSU called Scooter India Limited
If we don’t break of age old affair with socialism now then, we will be a poor country with a next door supper rich neighbour.

India needs huge investment in infrastructure. This will improve the economy but the real benefit will reach the bottom if start making the poorest of the poor employable instead of just literate.



 Some links are given below to the above mentioned topics.

http://en.wikipedia.org/wiki/Chinese_economic_reform

http://articles.economictimes.indiatimes.com/2013-02-09/news/37007724_1_vijay-super-scooters-india-revival-package

http://centreright.in/2014/01/b-r-ambedkar-the-greatest-free-market-economist-of-india/#.U7mGQPmSy2U

http://guruprasad.net/posts/the-real-reason-for-indias-brain-drain/

http://en.wikipedia.org/wiki/HLL_Lifecare