Monday, July 4, 2011

Greek crisis is a warning signal for India?

London | July 04, 2011 12:01:13 AM IST
It is now for well over a year and some dozen interventions by the Reserve Bank of India, the Government has failed to control the demon of inflation. It is now running at over nine percent. The areas that are being hit hard by this inflation are food prices and prices of other essentials. Why is it that a country with an economist as the Prime Minister, and surrounded by an array of other brilliant economists, is failing to control this demon?

The answer is loud and clear. The copy book measures that India's economists and its Central Bank are adopting is really meant for developed countries where economies are run in a transparent and clean manner.

The parallel economy that runs on black money can never be impacted by such measures. Thus you cannot fight price rise or inflation.

In almost five decades, the government has failed to deal with food storage problems. Why? There is big money in not creating storage silos. In the absence of storage facilities, let the government sell the grains to households at prices at which it buys it from the farmer. That by itself, would control food price at least of grains and solve the storage problem.

It is a fact of life today that India's political system is run by the cash that its political parties claim to receive as donations from the people at large! Do they? The reality is that barring the Left Front, India's political parties by and large have shunned electoral reforms which may make them accountable for the money they receive and spend?

India's highly competitive and enlightened media scene lacks in reporting on international affairs. How many people in India are really aware of the economic crisis in Greece? That crisis could well undermine even the powerful Euro. What led to the crisis in Greece?

Greece competes with India in having a parallel black economy. Just as in the India of today where the black economy is as big, if not larger than the white economy, in Greece, it is said that the black economy is bigger than the white.

Visiting the hotels, restaurants and resorts of Greece, you cannot believe that the country is in the grip of a economic crisis. Black money accounts for big spending.

If you visit the five star hotels of India or its clubs, where the rich and famous relax, you cannot see if there is any impact of high prices in those areas. You see people enjoying themselves not just there, but even in the 'dhabas' and the shacks of Goa. Cash is King here.

Like in India, it is the electoral politics of Greece that led to the political parties in power squandering vast sums of money on populist programmes that Greece could ill afford. If the coalition dharma has led to high scale scams and scandals in India, it is similar story in Greece. Visit any government office in Greece and you may find more than half the staff being absent? It is something like what was found recently at the Municipal Corporation of Delhi where several thousand absentee employees were shown on the roster.

It is time that the people of India take a close look at Greece and what is happening there. There are clear lessons in it if India is to avoid a similar disaster.

Let us not forget the past-India was forced to mortgage part of its gold reserves only a little over two decades ago. If we are not careful we could face a huge crisis again...

India has a great future ahead of itself. Its people are determined and hard working. They are honest. They are no less than the best in the world. They deserve a better administration than they have been given. They need to be given a level playing field, free of corruption and bribery. By Prem Prakash ...
We also need to look at the growth of China. No doubt they too are facing inflation, but for different reasons. China has amassed reserves of over three trillion dollars. It is today a major player on the international financial scene. As far as India is concerned the country is stuck at a measly figure of just over three hundred billion dollars. The inflow of foreign direct investment has slowed down considerably. Why?
To get the answer one needs to look closely not only at the manner in which the country is governed, but study the crisis in Greece. The similarities are too glaring. If corruption and bribery of India are now holding back foreign investment, it is the same in Greece.

India is trying to fight the poverty by a dole system known as National Rural Employment Guarantee Scheme (NREGA). This scheme is also about winning votes.

We are creating a welfare state that the country cannot afford. Does this scheme in any manner empower and prepare the poor for the competitive job market of India? Story is the same in Greece.

What are all those demonstrations in the streets of Greece about? The stone throwing demonstrators do not want their government to take away the populist measure or enforce austerity.

For long, the Greek politician has created populist handouts that won him votes. One day India's populist schemes could hit her in the face.

In New Delhi, the ruling elite, including the country's parliamentarians - the law makers - have their own welfare state.

Go into the restaurant for Members of Parliament run by the Railways and you realise the amount of hidden loss that the railways must be suffering in providing highly nourishing cheap food to the fat cats of Parliament.

The special privileges that the members of Parliament enjoy do not end there. Look at the number of houses which quite a few MPs have sublet to make extra money. Why? The MPs have their own special cell for getting their income taxes checked. They travel free on railways and airlines.

At the root of crisis in Greece is corruption at various levels. Tax dodging is rampant- so in India where it is the tax payer who is chased by the revenue department because that is where the bribes come from. They hardly spend time in going after those who are not paying taxes at all?

A recent Greek survey via satellite showed hundreds of large houses with swimming pools not being in the tax net. Conduct a similar survey in Delhi,Chennai, Hyderabad, Pune, Mumbai, Bangalore and see what comes out?

In Delhi, an ex-tax inspector is said to own the largest farmhouse in Mehrauli. If Greece has luxury holidays for its state employees, so has the Government of India the leave travel allowance.

Every day life has been made miserable for the ordinary citizens of India by the rampant corruption and bribery at all levels. It is the same story in Greece where it has been estimated that every household pays bribes of the order of Rs. 90,000.00 a year to get things done.

Like in Greece, here in India as well, the politicians are fighting shy of dealing with the demon of corruption. There is a lot of talk, but little action. Look at the shameless manner in which the main opposition party of India has not declared its stand on the Lok Pal bill issue? It seems it has no backbone.

It leads one to believe that politicians altogether do not want corruption and poverty to be eradicated from India.

Indian business men big or small have to put up with Indian bureaucracy, the licences and scores of other impediments in their day to day life. However, no serious foreign investor is going to put up with the nonsense of bribes and corruption.

It is this reality of India that is holding back serious foreign investment and its growth.

There is one school of economists who believe that a large chunk of foreign investment that has come to India via Mauritius in the last two decades is Indian black money that was stacked abroad during the "socialist pattern of society" era. And that stack of black money abroad belongs partly to the politicians of India.

Those who have the good of the country at heart need to sit up and force the government to tackle the demon of corruption and bribery. There is need to bring discipline, accountability and work culture among the civil servants and other public utility workers.

Civil servants take the government service to be a life time pension for no work. The culture of permanence of government service distorts the labour laws of as well thus keeping foreign investor wary of investing in India.

The rising clout of China on the world's economic stage and the crisis in Greece are warning signals for India to set her house in order. That also calls for an end to all kind of subsidies that the members of Parliament or other similarly placed public servants are enjoying in New Delhi or in the states.

Is it right to give pension to a member of Parliament just because he has served a term in the House?

India has a great future ahead of itself. Its people are determined and hard working. They are honest. They are no less than the best in the world. They deserve a better administration than they have been given. They need to be given a level playing field, free of corruption and bribery. By Prem Prakash (ANI)
Greek crisis is a warning signal for India?

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