DR. BHALCHANDRA MUNGEKAR (CONTD.): In the preceding 5 years, the rate of growth was 6.5 per cent. In the succeeding 5 years, the rate of growth was 8.5 per cent. For the period 2004-05 to 2010-11, it was 8.5 per cent. Fortunately, the BJP-led NDA Government demitted the office and the Indian economy really started growing after they were thrown out of the political power. Of all the social sciences, the economics is more precise because of the role of money. And, it is more causal science. It is not only dismal science. Any discussion on economy, without contextualizing, I fear, becomes irrelevant. The global financial crisis of 2008 and 2009 changed the entire map of the world economy. We are talking about recession. Now, there is no doubt about it. All documents of the Government say it. Neither we nor you are manufacturing it. The rate of growth is decelerating. The World Development Report and the IMF's Economic Watch Report have shown that every economy in the world, during the last two years, has deceleration, including the economy of China. I don't have time to go into the details. But so far as 2012 and 2011 are concerned, the United States, Germany, France, Italy, Spain, Japan, the United Kingdom, Canada, Russia, every country has witnessed deceleration. Even the China witnessed deceleration in 2001 from 9.3 per cent to 7.8 per cent. After the economic integration, after 1991, there cannot be even a single economy which can be immune or exempted from the repercussions that the world economy will be suffering from.
The second important point is that this is not only the rate of growth in general, but when I calculate the rate of growth of agriculture and allied services, when I calculate the rate of growth of manufacturing sector, all the data suggest that even the sub-sectors of the economic growth rate, during earlier five years and the later five years of the NDA period, are substantially better. That's why, Madam Chairperson, I request the House that should settle the debate permanently that NDA has no business to say that they had better performance, at least, so far as economic growth is concerned.
The Eleventh Five Year Plan has suggested inclusive economic growth. Probably, the speaker has suggested about how the Planning Commission was virtually out of the line, so far as the poverty line is concerned. The point of debate is twenty-seven rupees, per capita rural expenditure, and thirty-three rupees, per capita urban expenditure. What is the unit of measurement in economy? Suppose, for example, in 2008 and 2009 you consider average height of men or women is 5 feet and 4 inches as the eligibility height for a man or woman to contest an election. Can you suddenly change it into 14? I will be disqualified to contest the election because my height is 5 feet and 4 inches. Tomorrow you may decide 500 dollars per day expenditure. I am not agreeing to rupees twenty-seven. Yesterday, I was on a television channel. The television channel was saying that people were depositing onions into safe deposit lockers. I said if people repeat it, the onions will be rupees three hundred per kilogram because they were creating fear psychosis. Economics is not only dealing with what is exactly happening at a point of time. Celebrity Keynes underlined the role of expectations. And, the entire stock exchange market functions on expectations. It is absolutely unrealistic. But economy also functions on expectations. Now, it is from that point of view, I was saying that I don't mind if you want 500 dollars per day. But the Planning Commission had given at two points of time. For the first time, it is possible that by those measures the poverty has declined. You are free. And, I do not understand that any point of time the Tendulkar Committee had adjusted and made improvement over ...(Interruptions)... How much more time is available to me?
(Followed by 3m – PK)
THE VICE-CHAIRMAN (SHRIMATI RENUKA CHOWDHURY): I think if you can conclude fast, then, we can take another speaker.
DR. BHALCHANDRA MUNGEKAR: Okay. But our Party was given one hour time.
THE VICE-CHAIRMAN (SHRIMATI RENUKA CHOWDHURY): Yes, but there are other speakers also.
DR. BHALCHANDRA MUNGEKAR: But the previous speaker was given seven minutes more. ...(Interruptions).. I am trying to complete. ..(Interruptions).. My only point is that between 2004-05 and 2011-12, if you take even 500 dollars per annum, still, you will be getting poverty reduction, because the rate of reduction will be similar though not identical. That is the precise meaning of unit of measurement in Economic theory.
As far as another problem is conerned, investment is still 30 per cent plus. The gross domestic saving is around 32 per cent plus. As far as the Foreign Direct Investment is concerned, it was referred to again and again. I would like to say that the Foreign Direct Investment, during the four years before the UPA period, that is, from 2001-2004, was barely 19.4 billion dollars. Out of 256 billion dollars Foreign Direct Investment that has come into the economy, 230 billion dollars came during the last nine years of the UPA rule. As far as Foreign Exchange reserves are concerned, my friend Ravi Shankar Prasadji was talking about the time they demitted the office. In 2003-04 or 2004-05, when you demitted the office, the foreign exchange reserves were Rs. 6,191 billion. In 2012-13, despite adverse Current Account Deficit of 4.8 per cent, today, the country is having foreign exchange reserves of Rs.15,884 billion. It is in multiples of what it was in 2003-04 or 2004-05.
Sir, the third important point is about inflation. There is no doubt that inflation hurts poor more than the Members of Parliament. We have assurance that whether Parliament functions or not, our allowances are continuing. Therefore, inflation is not affecting us, except in discussion. But let me tell the House that during 2009-10 and 2012-13, the Minimum Support Prices of agricultural commodities were raised by nearly 70 to 75 per cent. Is there anybody in the House who would say that farmers’ Minimum Support Price should not be increased? That is the political economy. When the Minimum Support Prices of certain commodities are increasing, then, basically, they are sending signals to the market.
As far as Current Account Deficit is concerned, it is, basically, because of the gap between the imports and exports. Precisely, because of the global recession, the demand for India’s export is receding and our imports are inelastic. Over a period of time, we have developed our industrial structure in such a way that our imports are inelastic.
Sir, I have two more points to make. We are importing 70 per cent of crude oil. There has been global depreciation of currency. We are talking about depreciation. My friend, Mr. Piyush Goyal, just now was talking about every currency. Rupee has been depreciated. Not a single currency in the world during the last two years remained immune from depreciation – from six or seven per cent to even sixteen per cent. Therefore, the basic question is, in order to reduce the current account deficit, when they try to raise the prices of petrol and diesel, you are making a hue and cry, despite the fact that international prices are rising. I should put on record that during NDA regime, for the period of five years, petrol prices were raised 21 times and diesel prices were raised 24 times including kerosene prices, despite the fact that crude oil prices in the world economy were 16 dollars per barrel. You want to control fiscal deficit, you want to control current account deficit but you don’t want to touch petrol and diesel prices. This is unacceptable. Whatever capacity may be, we will be simultaneously curing the economy when certain objectives are conflicting.
Madam, my last point is about the inclusive growth. In this country, it has become intellectual fashion, particularly among Economists followed by politicians that whenever something is given to poor, it is considered as dole.
(Contd. by PB/3N)
DR. BHALCHANDRA MUNGEKAR (CONTD.): It is considered unproductive expenditure; it is considered wastage; it is considered scam. Madam, two minutes, please. People have gone on record saying that even MGNREGA Scheme is a scam. Madam, 4-5 crore rural poor households are getting jobs and about 3-4 crore mandays of jobs are created every year at the expense of 35,000-40,000 crores of rupees. That is the reason. Due to various measures that are being taken, the poverty in rural areas has declined faster than in the urban areas. How do you consider that that is a wastage? When all kinds of incentives are given to the privileged people, this House passes the Resolution, raising the emoluments and privileges of the Members of Parliament with a complete consensus, within a fraction of second. And, when poor agricultural labourers, farmers, etc., are getting Rs. 75-80, there is a hue and cry. Basically, one of the factors for the inflation is also the increasing purchasing power of the rural people. That is why not only UPA has succeeded in achieving a rate of growth of 5 per cent today despite the slowdown, but the UPA has also succeeded in making growth ‘inclusive’.
Madam, thank you very much for your magnanimity.
THE VICE-CHAIRMAN (SHRIMATI RENUKA CHOWDHURY): Now Trivediji. I request you all to please speak to the point so that we can have the Minister conclude everything by 5 o’clock, if you don’t mind. Yes, Trivediji.
DR. YOGENDRA P. TRIVEDI (MAHARASHTRA): Madam, I will be as brief as possible. I am very much obliged for giving me this opportunity. They say, ‘economics is the science of applying scare means to alternative ends.’ But, here, in the name of economy, we have been discussing politics to a large extent that whether NDA Government was better or whether UPA Government was better, UPA-I or UPA-II. Let us now discuss on economic issues which are before us.
Madam, I was reading an article last week in ‘The Economist’. We talked about the BRIC - Brazil, Russia, China and India, and it described them as ‘sprinters’ who came with great hopes but could not live up to the expectations. It is a fact that the expectations with which we rose, to a certain extent, we have slowed down. Whether it is a temporary halt or whether we are going to again march forward is one of the ideas which were picked up in that article.
Madam, a lot of statistics have been given here. I have also got my bag full of statistics, but I think so much has been spoken by Shri N.K. Singh and others also; so I don’t want to repeat those statistics. There is a talk of fiscal deficit, current account deficit, revenue deficit, purchasing power parity and all that. So, I will try to avoid them as far as possible. But I will ask a fundamental question that to what extent these statistics are dependable. As Mr. Ram Gopal rightly stated, we have a parallel economy. There are goods which are manufactured; without payment of excise duty, they enter the market. There are trading activities which are not recorded. To the extent to which we know there is a parallel economy going on in our country, can we say that all these statistics which are given are totally dependable? When we know that the velocity of black money is higher than the velocity of white money because it moves very fast, do we know what happens? What is the result of this black money which is in the process of production, in the process of trading, in the process of the service activities? I think, a suggestion was made that, somehow or other, this extent or the spectre of black money has to be tackled. In what way, it will be tackled, whether it will be a voluntary disclosure scheme or whether it will be some scheme by which these black moneys are brought out in the regular money, is something for which the Finance Minister will have to address his mind.
Madam, I am only giving suggestions which are relevant for the purpose of reviving the economy if it has slumped to a certain extent. Then, it is an accepted position that apart from the structural changes which may be necessary in our economy, there is a need for a massive dose of Foreign Direct Investment.
(Contd. by 3o/SKC)
DR. YOGENDRA P. TRIVEDI (Contd.): So far as the US and Europe are concerned, it is more than 30 per cent; we are at about 11 per cent. So, I personally believe that a massive doze of foreign investment is necessary. Now, what is it that is holding up the foreign investments? The main reasons are procrastination, red-tapism, controls and unnecessary laws. Some of them require to be strongly dealt with. I can tell you, we, in Mumbai, require 37 permissions for opening a grocery shop. For starting a construction activity we require more than 80 permissions. Now, what is this? First of all, at least, 30 per cent of the laws at the Central level and 40 per cent at the State level need to be scrapped. In Mumbai, we have a law that if there are ten couples on the dancing floor and the eleventh couple wants to join, it has to obtain a permission because it is violating some old archaic law. Now, these laws require to be scrapped. If we want to invite foreign direct investments, there is no use talking only about one-window selection. If man has to go to China, Indonesia or India and if he finds that he gets clearance in China within one month and in India it takes six months, he would definitely go to China. So, I think such unnecessary laws which are clogging the flow of foreign direct investments should be...
THE VICE-CHAIRMAN (SHRIMATI RENUKA CHOWDHURY): Please conclude.
DR. YOGENDRA P. TRIVEDI: Madam, I would take just one minute more.
Then, the article also mentions about a comparison with China, Russia, Brazil and India. It says that India has one potential, a young population which can be effectively harnessed. Now, this young population has got expectations. This is what is known as the revolution of rising expectations. They have got a divine discontent amongst themselves. The media, the television, gives them hopes of various luxury items and we have to somehow or the other fulfill them. How do we do it? I think this is important. I have full faith in the hon. Finance Minister. He is one of the most brilliant persons we have in our country and he should be able to tackle these problems which are before us. I would once again quote Keynes; he had said that a donkey remains stationary unless it is moved either with a carrot or a stick. Man is no different. You must either give him the carrot of profit or the stick of regimentation. See to it that we move. We, as a country, should move as fast as possible. And I have full faith that our Finance Minister, if he is determined, could do that. We have to take bold steps. If he does it, the country would again be able to move further and we would be able to have double digit growth.
THE VICE-CHAIRMAN (SHRIMATI RENUKA CHOWDHURY): Thank you. Now, Mr. Naresh Gujral.
SHRI NARESH GUJRAL (PUNJAB): Thank you, Madam.
It is ironical that every time the Congress Government demits office, or is about to demit office, it leaves the country’s economy and its finances in a total shambles. You would recall that in 1989, the Congress Government had bankrupted the nation, so much so that the succeeding government had to sell our gold to England to raise some foreign exchange, and thereafter, we had gone to the IMF with a begging bowl. Today, the situation is even worse. The country’s economy has been brought to its knees by the irresponsible policies of this Government. We are sandwiched between low growth on the one side and high inflation on the other, especially high food inflation. The aam aadmi, whom they claim to represent, can’t keep his body and soul together. Sixteen crore people are either under-employed or unemployed. Our youth has lost all hope. Small factories and small businesses are closing by the day, especially, the labour-intensive, export oriented industry is in a total mess. The rupee is tumbling against all foreign currencies and the artificial means by which the Reserve Bank is trying to resurrect it has only led to increased interest costs and sucking of the liquidity from the system, which hurts both production as well as consumption.
(CONTD. BY HK/3P)
SHRI NARESH GUJRAL (CONTD.):Manufacturing sector has declined for 13 straight quarters and the capital goods output contracted for the third month in a row to 6.6 per cent in June reflecting the subdued investment climate. Our industrialists are not investing in this country at all. They are all going abroad because they are fed up with the ineptitude and the fact that there is no decision-making happening in the Government added to the crony capitalism that we all witness. I am very happy that this Government added 75,000 megawatts of power generation capacity in the last three to four years for which I compliment them. But it is very sad to see that almost 50,000 megawatts we cannot operationalise because of lack of fuel. This is putting a huge burden on our financial institutions and many PSUs like BHEL. And there is a huge risk of their going under because of rising NPAs. (Time-bell) The hon. Finance Minister has announced some steps recently, but this will only postpone the liability and the succeeding Government will have to face the music. I will not be surprised if very soon we have to rush to the IMF again to bail us out as our reserves are dwindling by the day. The current account deficit just does not go below 13 billion dollars a month. I don't know how he has predicted that he will be able to contain it at 70 billion dollars. We are importing coal worth 20 billion dollars this year. Last year the figure was 15 billion dollars. And if we have to give or provide fuel to our existing plants and the capacity which is being built, this will touch triple digits in the future. If the Mumbai market is to be believed, 170 billion dollars of foreign exchange loans have to be repaid this year.
THE VICE-CHAIRMAN (SHRIMATI RENUKA CHOWDHURY): Please conclude.
SHRI NARESH GUJRAL: Madam, I have spoken for three minutes. Large parties speak for half-an-hour. Do you think that they only have all the wisdom and all the knowledge? You must give some time to small parties also. ...(Interruptions)... This happens every time. ...(Interruptions)...
THE VICE-CHAIRMAN (SHRIMATI RENUKA CHOWDHURY): Please try to conclude. ...(Interruptions)...
SHRI NARESH GUJRAL: I also want to say that the Finance Minister had very optimistically predicted six-and-a-half per cent growth when he presented the Budget and all his deficit figures were based on that. Thirty-three per cent of the planned fiscal deficit was used up only in the first two months of this fiscal year. The structural changes, which are required, and the decision making, which is required, both at the political and at the bureaucratic level, are completely missing. In fact, the Food Security Bill, with which the Government hopes to win the next election, will add another Rs.80,000 crores to our fiscal deficit. While I welcome the Bill, they have only taken care of the consumption part. The supply side is completely neglected. Where will this food come from? Today, we may have the reserves. And I know that just in Punjab and Haryana eighteen-and-a-half million tonnes is lying in the open. While the rains are going on, a lot of that will rot. They are not planning anything for that. What about the farmer who has to provide the food in the future? We are refusing to increase MSP. It is being fixed arbitrarily. The Swaminathan formula, which everybody has been requesting for, has been ignored. If this goes on and if we have two or three bad years of rainfall, I am afraid, the so-called food security that we are all very proud of will not be visible. I will only urge my friends here in Mayawatiji's party and Samajwadi Party to end the country's vows quickly and vote out this Government so that we have a proper Government which can lead the country forward. Thank you.
(Followed by 3q/KSK)
hk -- KSK/4.45/3Q
SHRI ANIL DESAI (MAHARASHTRA): Sir, on the issue of economic situation of the country, inflation, the price rise, is the biggest worry of one and all in the country. Today, in the morning, when I was watching TV, I saw a very different way of selling automobile tyres in Jamshedpur. A retailer was selling automobile tyres and he was giving 5 kg packet of onions free against that. Maybe, it is satirical but that reflects the situation in the country and the economic health of our country. Prices of essential commodities were really under control when NDA regime was on. Now, it is posing problem by the day in the UPA Government. You name the product, you name the service, you think of the fuel, it is ever increasing and that is the cause of worry for the common man who is supposed to be represented by the UPA Government as they claim tall. Be it Wholesale Price Index or the Consumer Price Index, you cannot convince the common man by giving different kinds of figures and indices. They are not considered because the common man is living from hand to mouth and his problems should be addressed by the UPA Government. Now, how they will address their problems is left to the wisdom of our learned and very experienced Finance Minister.
Now, if you happen to see infrastructural development, it has been experiencing hurdles every time any policy is put into practice. It is because of the apathy and indecisions of the Government with respect to roads, electricity and water management. Despite their coming in succession, the people of the country have seen that scams have come to the fore. You can take any sector. In every single important sector, like roads development, telecommunications and coal, there is a scam. The scam in Defence procurement has shaken the psyche of the nation.
(MR. DEPUTY CHAIRMAN in the Chair)
Industrial growth is in the negative. Apathy towards farmer fraternity has resulted in poor output in the agricultural sector. The Public Distribution System is a thing that we have to really concentrate on. Housing schemes are not coming or are not offered to the poor people. Education sector, health sector and EGS, about which much has been spoken in the House, are yet to be seen. Now, introspection on the part of the Government is a serious thing which the Government should do and the key to it is good governance. Good governance should come not only by defining it or putting it on the paper but it should also be seen by way of action. Strict steps need to be taken to improve the economic health of the country.
Now, there has been failure in achieving the targets, whatever targets are set for achieving the GDP. The slow economic growth is the worry in front of the country. After 2010, if you see, total decline in economic growth has been there. The RBI has been painting a very pessimistic financial picture of the economy of our country. Fiscal deficit is posing a serious problem. Falling rupee, sluggish exports and the rising dependence on imports have widened the Current Account Deficit. Domestic industry, which has been neglected by the Government, should be given proper boost. Foreign investment, that is, FIIs, the way they have entered the capital market, that is, stock exchange, and any movement, the exodus or the way they move out of that, is seen and the brunt is borne by the small investors, common people. If the Government really thinks that the focal point of progress should be the common man, then the Government should see as to what is seriously wrong with it’s policy which need to be corrected.
Now, the FDI in retail, multi-brand retail, has also failed where you have given many concessions but foreign players are not ready to come. They do not have faith in the policies of the Government. Similarly, in FDI, you are thinking of increasing it from 26 per cent to 49 per cent in the insurance sector. That is completely unwarranted. If you give boost, or, if you give impetus to the Indian public sector companies, they are really in a position to perform in a much better way because every year, public sector insurance companies give crores by way of dividends to the Exchequer.