Short Term Gains & Vote Banks: Problems In A Democratic Economy

Posted on August 20, 2012 in Biz and Eco, Politics at Play

By Rahul Kumar:

With debates and talks about elections to be held in 2014 and the strategies and course of action by various political parties not to mention the coalition UPA presently in power for winning the elections, I couldn’t help but notice the influence of these elections and the democratic society over the economy, as well as the decisions and techniques manipulating its course. First of all, without a doubt the decision of our great leaders who got us out of the claws of British colonial system regarding the choice of constitution and system (democratic) we were to follow was not at all questionable upon and not just Indian constituency but the countries around the globe for example US has chosen it and praised its success. However every system has two fold traits, and so far we’ve been converging towards the smoother side of the democracy. But how many times we take down the monocles of respect towards the decisions of our old ones and put to test on a balance, pros and cons of this system.

 

Yes when we look at it from a social point of view the pros defeats the cons with whopping numbers. However we cannot overlook the other aspects it has been influencing such as the economy which has become a very serious concern these days. With slowdown in Indian economy, falling growth rate increasing trade deficit, falling currency consequent upon widening of the current account deficit and trade deficit, also not to mention the Eurozone crisis, which has not only influenced the European union, but also has had a great impact on global economy, hitting hard the western subcontinent like US as well as the Eastern coalitions like BRICS, there has emerged a great need for fierce economic reforms more than ever before. The need of the moment is for government to take stern actions to dilute the global slowdown as well as the inside problems. However with elections on horizon the inclination of government is more towards pleasing the population rather than bringing reforms, the indication of any such reforms seems a far-fetched dream.

The problem arises due to the little information over economic matters and more preference to quick gains by people. In a country with only a bunch of educated people, people are not aware of how the economic system works and why a certain decision is being taken up. For example, recently the rates of petrol were elevated and there was a spread of rage over this increase in rates. However little did people know about the reasons for the increase in prices. First of all, the petrol is no longer a government regularised commodity, hence the decision relating to the increase or decrease in prices of the petrol is no longer in hands of government, it was solely the decision of the oil companies due to the losses they’ve been incurring due to the falling rupee.

Now another argument against government arises that it could have given subsidiaries or it could have reduced taxes to dilute the impact of elevation in prices, but with a high fiscal deficit it wasn’t an option either. However with lack of information about the problems being faced by finance ministry, people started pin pointing government for their incompetence and lack of taking up necessary steps in bringing down the petrol prices. Another such case in this regards can be quoted when the former railway minister Mr Dinesh Trivedi tried and elevate the ticket prices. It had to face resistance from Trinamool Congress supremo, Mamata Banerjee, who just to project a public friendly image not only stopped this elevation from taking place but also forced government to change the railway minister. Once again political influences and voter inclination took precedence over economic gains. The ultimate result was rollback of these prices and coming up of new railway minister Mr Mukul Roy.

One of the most talked about instance of influence of democratic forces over economic decisions is “FDI in retail” which could have proved to be a boon not just for economy but for farmers and consumers. The farmers would have got right prices for their hard work and consumers would get commodities at right prices too. However the resistance came from retail owners who were afraid to lose their commission. Now just to keep this retail section happy and protect the vote bank from this section all the pros of FDI in retail were overlooked, and the idea had to be dropped. There’s a long list of such incidents where just to please the public and give them immediate gains for protecting the vote banks, the perfect reforms that may have pushed our crippled economic boat to a swift speeds were dropped. Now are we really in shape to question our finance ministers for economic slowdowns and not bringing necessary reforms when we are the ones pressurising them.

Next is the question of elections 2014. With an inflation rate of 7.2% and increasing pressure of public on government to bring down the prices the abrupt decisions of government to take steps to reduce these inflated prices on the cost of already wide deficits is but obvious. Unnecessary subsidiaries and decrease in taxes would be next steps to please the voters by our finance minister.

The democratic system has undoubtedly brought down many of the social evils prevailing in country for ages. But its flaws have also been overlooked for ages too. The problem is not in the democratic system; of course economic democracy is an integral part and is very crucial to economic equality and justice. However the near fossilised system needs reforms itself. A better understanding and amendments in old and dusty democratic system is needed. Also an understanding needs to be created within the public/voters about how the economy works and need to educate them in a better way regarding the economy, its working and the problems. We need aggressive and stout-hearted government to speed up our crawling economy. Aggressive reforms and far sightedness is the need of hour. And in a society like ours where the decisions are so much influenced by the voter and election point of view, and the public is merely interested in short term gains; the miraculous reforms merely seem like a mirage.

Youth Ki Awaaz

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