Delivering the key-note address at the national conference on “Politics of Economics”, third in the series of the ORF-MMA seminar on “Functional Governance for a New India” at Chennai on 12 November 2018, Dr. T.V. Somanathan, the Additional Chief Secretary to the Government of Tamil Nadu (Planning, Development and Special Initiatives Department), listed out the reason where politics of economics fail, and should be corrected. Economic observations could comprise both positive statements and opinions, where the former may or may not be true, or could also lead to fallacies. On top of it, mixtures of normative and positive statements have the potential limits to assess the ground reality.
Second, with the mixture of positive and normative statements, which itself is a weak foundation, there lies a strong assertion, Dr Somanthan said. Lastly, with the available information, decisions are taken on aggregate costs and benefits while formulating policies. Moreover, data on gains and losses is unavailable, when the policies hit the ground, as unlike in physical science, there are no laboratory environment for testing and the scale and dimensions vary from situation to situation. Despite these challenges, economists delivering intelligent reports and politicians interpreting them with diligence alone help formulate successful policies, he said.
Touching upon the current scenario, M.R. Venkatesh, author and economic analyst, provided a statistical analysis of the GDP of the nation, where he stressed that 60 percent liabilities with no asset to support them was a sign of need for change in economic policies. On the other hand, the nation could reach a debt of Rs 60 lakh crores by March next year if correctives were not applied – and which was also far-fetched, over the short term.
Speaking of Tamil Nadu, the “so-called welfare State”, Venkatesh said that the revenue-share from income-tax went to meet only the salary payments of government employees, welfare policies and ‘freebies’. For the limited development and functional expenses, the State has to take huge loans and the interest has been mounting over the past years and decades. This indicated a ‘fractured economy’, he said adding that there was thus a need for a combination of political and economic reforms, and also a need to ensure that those reforms, in the form of welfare measures and/or freebies, actually reached targeted sections.
Throwing light on what policies have altered the nation over the past four years, Gopal Krishna Agarwal, national spokesperson (economic affairs), Bharatiya Janata Party, explained how national economic and political problem are identified, and how a technological infrastructure has been created in order to implement policies. By integrating the stake-holders and fixing accountability and transparency, the Centre has ensured a level-playing field, he said.
Agarwal, taking cash-flow as an issue, claimed that the Centre has ensured financial inclusion by creating 30 million ‘Jan Dhan’ accounts and bringing them into the banking sector, with the help of available technological advancements. He also said that GST was another measure to ensure greater transparency, forcing the closure of ‘shell companies’ and ensuring that the nation moved up the ladder of ‘ease-of-doing-business’. He also added that contract enforcement was yet to be achieved and that policies should be predictable and transparent.
“Inequality is the global problem of the 21st century,” said Prof. M.V. Rajeev Gowda, Congress Member of Parliament (Rajya Sabha), adding that the preamble of the nation’s Constitution guaranteed every citizen, equality of status and opportunity. However, it is the responsibility of the government to ensure the same.
For the past 70 years, inequalities and inequities in the society have been addressed through the political process and effective bureaucracy, thus eradicating untouchability and providing reservations to under-developed social class in order to uplift them, and ensuring enhanced development of the nation. In today’s context, inequality has been reduced in terms of societal values, though there was greater need to bridge the gaps in terms of economic, gender and regional inequalities and inequities, Prof Gowda said.
According to him, less than one percent of the nation’s population were in possession of 60 percent of the economic value, pushing half the population under the poverty line. Government policies must be designed to address this issue to redistribute the wealth, and to give opportunity to people living below the poverty line.
Speaking in the context of gender inequality, Prof Gowda said that women in rural areas are given no opportunities other than agricultural jobs (feminisation of agriculture), and this issue has to be resolved. Similarly, regional inequalities needed to be addressed, so as to ensure that local pride is not hurt and at the same time others are also integrated into the mainstream. Urbanisation was one way of achieving the same, but the process has to be implemented but in different scales and dimensions. The reservation policies should have to be recreated, for dimensions other than caste, he added.
There is a need to take economic decisions at grassroots-level, said former Union Health Minister Dr. Anbumani Ramadoss, MP (PMK-Lok Sabha). He said the nation’s problems have moved from social inequality to economic inequalities. Taking Tamil Nadu as an example, he claimed that freebie policies have been turned in recent years as a political tool for electoral gain, that too after squeezing the very same public to pay more tax to pay for freebies. On the top of it, one-third of the State’s income was derived from liquor revenues, and there was no way one could justify it.
According to Dr. Anbumani, urbanisation was a cause for rural population losing their livelihoods and farmers losing their occupation in a big way. This was not ‘good growth’, he argued. The current economic policies put down agriculture, and investments in social sectors have also been falling. In this context, he pointed out how the health sector was getting only 0.8 percent of the State GDP and education sector 2.5 percent. Worse still, the present system was very much tutorial-based, and was not based on either vocational training or knowledge-acquisition.
Taking global warming into account, and floods and droughts alternating year after year, water will be the biggest problem of future years. In order to avoid such catastrophic situations, investment should be concentrated on irrigational infrastructure. He also wanted special agro-economic zones to be created to ensure farm sector uplift. Otherwise too, governmental policies should reach each and every man of the nation, Dr Ramadoss said.
Politics deals with identities whereas economics deal with ideas and structures, said K Pandiarajan, Tamil Nadu Minister. Elaborating on Centre-State economic relations of the future, the minister said that politics help identify the boundaries of a nation, but social dimensions ensured that they remained that way. Having said that, it needs to be acknowledged that it is the political leader who ensured the integrity of the State or nation and is the crucial element in fostering social cooperation and societal cohesion, Pandiarajan added. Financial architecture, human resources and natural resources decided the economics of the politically-bound region, he added.
Speaking of the relationship between economic and political forms of global, national and regional architecture, the minister said that policies pertaining to the three were inter-dependent and complex. With a better understanding of clusters of people with certain identities, economic policies should be modelled, competing in the global arena, without losing existing values, the minister added.
This report is prepared by S Sivanesan, Associate, Observer Research Foundation, Chennai
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