The Social Cohesion Factor in Growth & Distribution
By: Amit Bhushan Date: 2nd Nov. 2017
One of the key to coming elections is likely to be the social cohesion factor. While the government may have made big noises, the large employment sectors like construction (Real estate) seem to be down and signs from the Readymade garment sector also seem to be odious for now. While the government on its part seem to be investing on infra or more particularly Roads, however this does very little to calm the ruffled feathers especially looking out for jobs within city/towns rather than at construction sites. With banks still not able to gaze at the GST data, whatever that might be available that is, so their view to lend basis the same is still not clear. There is also a near lull in the mergers and acquisitions market in India which should have been revving up given the hype around Insolvency and Bankruptcy code and the government’s resolve to protect banks and public interest.
While the enrollment of all types of business into tax network to create a level playing field might be a good objective, the government might also need to figure out that such activity is fun. For a tax like the GST, free-flowing & smooth credits to buyers would have ensured that they have interest in ensuring tax compliance for what they buy and then they also adhere to charging the end consumers for tax consistency and balance. However consistent flip-flops and glitches seem to have robbed the Netas in government of reformer’s tag and being unprepared to intellectually deficient theme seem to be building up although the Netas in government and the bureaucrats may be loath to admit the same. The businesses seem to be suspecting the new system to be able to perform is something which the government doesn’t seem to have figured in its calculation while just concentrating on the revenue number. While the government has announced capital for the banks, but how does it plan to ensure the revival of the SME and consumer lending markets is yet to be seen. The government, to show that it is responsive on some counts had gone ahead to reduce the taxes on fuel to alley some criticism on its way.
Then we have the agri and rural sectors. The agri sector was looking forward to some magical formula where the farmer’s income would improve. Since the prices cannot go up to take care of the non-farm poor, so some improvement in productivity was the only chance along with some tax related tweak in input prices. Improvement in irrigation, better technology for seeds or pest & worms control, support to market through better transmission of prices and lower power to middlemen was expected along with better storage facilities. The rural sector especially allied agri or rural production had its similar aspirations. To some extent supply of electricity and better road connectivity may have helped however more sectorial initiatives are being yearned for and a lack of common platform like some industry body that looks at the growth related issues for small & tiny units seems miles away as of yet. Rising competition especially from imports, rising capital intensity and fast changing technology brings with itself new demands including for greater skills transmission in the sector and the current support systems seem woefully inadequate even for organized collection and dissemination of information here. While the Netas won’t mind spending crores for ‘campaign’ however fall short of time and money to maintain ‘connect’ with the tiny businesses and this is where political changes are most likely. While the public seem to be getting ready, it doesn’t seem like the Netas are prepared because of lack of any cogent plans being presented or discussed as of yet, although one can scan a lot of hot air on the issue.
Then of course comes the state of public institutions especially in Education are already much in talks but also in the healthcare or logistics sectors as well. The hype being built is a cause of changes in expectation, which seem no signs of being fulfilled. What the Neta seem to be avoiding is discussion around ‘fixes’ since they want to retain total freedom on what they have to offer including a chance to avoid taking decisions till it almost is forced upon them. This is because implementing ‘changes’ tend to raise a lot of dust and political muck even when they are pushed by a political consensus and ‘people first’ as a mantra doesn’t rhyme with the business-neta bureaucrat nexus focused on personal interest. Let the ‘game’ evolve…