ECONOMIC SLOW DOWN-PART I
There is a perceptible slow down in economic activity all around. Jobs are being laid off or cut down. Government estimates of revenue through in direct taxes have come down drastically which is seen as an indicator of the slow down in economic activity. Trade associations are clamouring for State intervention for a slew of measures to restore investor confidence and also to kick start- pump prime to use worn out cliches- the sagging economy. These are nothing but expecatation of give aways by the Government euphemistically called as requisite sops to revive the economy. The Government also responded by reduction of CRR/SLR so that additional money would be pumped in to economy through banking system and a host of duty rate cuts first from 14 percent to 10 and then to 8 percent. This will further decrease indirect tax collection and increase the fiscal deficit. Economists who were hitherto reprimanding for mounting fiscal deficit now find newer techniques such as mounting non plan expenditure such as subsidies, Pay for staff etc which contribute to 2 and 2.5% of GDP in order to say that the trade off by reduction of indirect taxes alone is not the contributory factor to the fiscal deficit.
About one year ago, thousands of farmers were commiting suicides due to crop failure of Bt cotton and mounting debts owed to private lendors in the Vidharba region of Maharashtra. Some suicides were also reported elsewhere. None of us bothered even though more no of people depend for their livelihood on Agriculture. At that time, the sub prime crisis did not happen. At that time,. our then FM commented that more people should come out of farm jobs and land must be used for much more productive use. The Chinese model was also shown as due for replication in India.
Then happened the food crisis. Not less than the President of USA commented that the emerging economies like China and India were creating this crisis due to increased consumption. Some others felt that the diversionof food crops to produce bio fuels contributed to the spiralling food prices. In India, the futures trading in pulses, cereals pushed the prices out of reach while the poor farmer was not getting his due. At this point of time, people like our former FM talked about creating more Industrial jobs for farm workers,. Assume that this happened. We would have more people laid off than what is seen today. the food crisis would have brought a Saharan African agrarian crisis in this country.
This leads to our primary question?
Is it fair to bail out Industry every time it faces crisis while leaving the farming community to the mercy of nature?
Let us go in to this problem a little further
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