By Shivaji Sarkar
The economic agenda of prime minister Narendra Modi is getting clearer but it needs a holistic look. His averment on railways not being privatized and the economic advisor saying the public sector would get a better role in the ‘make in India’ and development sound reassuring to a country where the private sector though prospering has lived in a cocoon for having more profits and subsidies (incentives).
Modi has to evolve a new economy. So far the economic debate veers round what is euphemistically called “poverty management programme” (PMP). The prime minister is obviously under pressure of looking for funds to pep up the economy. So an obsession with foreign investment or for that matter any kind of investment is natural.
That is where the government needs caution. The 23 years of Manmohanomics has emphasized on private corporate growth, shrinking government, higher cost, tax on tax, cess on cess and toll on toll. A free moving country finds too many brakes. It resulted in increased rich-poor gap and heightened poverty. Slow growth and loss of jobs are natural.
The new government has to have a new economic vision combining agriculture, farm land, growing urbanization, road construction, low power-energy cost, industrialization and rising taxes. Today VAT is to be replaced with GST. The VAT is 25 per cent of the price of a product. The proposed GST may be pegged around 27 per cent. It does not hurt the industry. It hurts the government, the largest consumer, and the common man who bear the brunt of industrial profits.
The latest proposal of the road transport ministry to increase road cess on petrol is a classic way of stating that Manmohonomics is not dead yet. Even now one pays Rs 2 per litre as cess and that should have built up over Rs 60,000 crore corpus. The principle of fleecing the people as in Manmohanomics must not be the base of the new economy.
No country goes on building roads in perpetuity. The “connectivity” is meaningless if people cannot travel on it. When people are paying high cess, road tax, city toll – none of which are to be subsumed by GST – why should they pay toll on highways or expressways built with their money? It only fattens the pocket of the so-called developer, who thrives on public money.
As a first the NDA government should allow toll-free movement of all private vehicles, taxis and farm goods. Lowering of toll, if at all to be levied, for larger commercial vehicles also has to be considered. The levy for any stretch should not exceed 30 months, the period which gives back the investment made by anyone. The 30-year lease to a concessionaire, mostly large houses, only makes the people and economy poorer.
In such scenario, Modi’s renewed fancy for the railways raises new hopes. It is nice to learn that it would be the central focus of development and would not be a minister-centric activity that has been the bane of railways.
Each minister over the past many decades used the railways to “develop” their own constituencies, take political mileage and increase popularity by introducing trains that lose sheen no sooner a new minister takes over.
The prime minister wants it and the postal services to be developed as the crucial infrastructure. It is the right approach.
But it is also true that an ordinary post now does not reach the destination. Most of it goes into “raddi”. The private courier does not take mail to hinterland, as it is unprofitable. A vital communication link built by the colonial rulers and thriving till about two decades ago is in a mess jeopardizing growth. Postal communication and telephony costs are becoming exorbitant. It hurts the poor, farmers and those in remote rural areas.
The new government would earn kudos if the credibility of the postal services and railways are brought back. Contrary to the views of the “experts” none of the two need heavy investments. They need to get back their old management culture that functioned efficiently enough. The new management concept that any improvement (often called reform) needs investment – because it increases profits or commissions of some – is a misnomer.
The railways despite many problems remains one of the better-managed institutions. Spick and span trains emanating from Varanasi like Shiv Ganga express or ViswaBharati fast passenger from Shantiniketan could be cited as instances of the capability of the railways. These have the cleanest toilets and cheapest food.
True, railways functions against many odds. Its prioritization of trains has to change. An older train may be a Janata, Lal Qila or Gomati have to be restored their original speed of 1950s or 1970s, when these were introduced, if these cannot be speeded up. The reservation system has to improve and must do away with Tatkal, as suggested by the parliamentary standing committee.
The speed of goods train at 20 km an hour, as pointed out by CAG, has to increase. The simple steps do no cost a penny. It only needs a change in attitude of looking down upon heritage.
Yes, it needs plan investment of Rs 63,000 crore for quadrupling of tracks and some other improvements. But if the railways could be slightly put back in time to restore its basic management culture, upkeep and schedule much of it could be reduced too.
Similar is the situation with the postal department. It needs infusion of manpower to keep it the most efficient communication network. It suffers from what could be termed as the “blueline bus” syndrome. The private courier services are sabotaging it. It requires minimum investment – not the huge one that is often projected as prohibitive.
Modi has raised hopes. He has to fulfill the promises made by ensuring low-cost- high governance syndrome. The budget is not far away. It is difficult to do all. If he can start with railways and postal services and branch on to other areas for improving it – no reform is needed – it would be a new beginning. The nation can have a new economy if the public sector is allowed to take the centre stage. The private sector can always help and coexist.