The Reserve Bank suggests that government spending is what is missing. Can I just say and point out that the basis and foundation of a robust, modern, durable and sustainable knowledge economy lies in Private Investment and consumption demand. I totally agree that government expenditure to make available public goods like infrastructure are indispensable, however, it’s the vision and timing of it that I’m questioning.
A reserve bank, above all, needs to be prudent, cautious when it talks about money, about government spending and how to manage it and they must show the same caution when creating estimates. The RBI is way out of bounds to say that government spending is the missing element to make the economy work.
Private investment allocates and directs labour, land and capital to those areas/industries which will generate maximum value. It spreads these across a range of sectors and most importantly ensures that these resources are mobilised to places that will sustain into the future. Government spending is in fact just taxes being spent or future taxes being spent, now. When used without heed, it’s either just a waste of money or isn’t value generating.
And so, I come full circle to the point that domestic consumption, which is an indicator of growth of standards and private investment, is what is needed. The reforms will take a while and they might be painful, but we must act on it. Yes, the pain will be worth the gain. And, yes the government needs to spend billions on infrastructure, but do not forget — it’ll generate value only upto a certain point.
So, it’s probably not the best thing to privatise, but airports are up for auction under a public-private-partnership model. The usual union protests were expected but they made solid accusations. 12 airports have been leased under the model and just one company has cornered them all — the Adani group. Not even the most stubbornest can deny that there is something fishy; murky.
It’s not surprising that Adani had enough money to purchase them. He runs coal mills and he’s got the cash, but it’s surprising how the Union government can allow such a monopoly. Sometimes, we need to go beyond the highest bidder and see and examine if they can do the job. The history of Adani’s disaster, cover-ups and lack of respect for the law should’ve been a red flag. It’s appalling.