Finance Minister Pranab Mukherjee has promised to take some austerity measures to stabilise the Indian economy. It may be presumed that these measures will include a cap on how many times MPs and Ministers can swan off overseas on tax-payers’ money. It may also mean that public officials will be urged to travel economy class. Such measures were announced after the global meltdown in 2008. The situation has become grim now with Greece taking the Eurozone down with it. In such circumstances, travel restrictions on VIPs will not fill the bill significantly. The government has to rationalise prices which are unrealistic. Oil prices have gone up globally but diesel in India remains underpriced. Should diesel prices keep pace with global oil prices, companies will be forced to resort to more cost-effective technologies. The diesel price should be allowed free movement. Fertiliser prices are controlled at the retail level. There is rampant black marketing in it. Ultimately the farmer has to pay a high price. Government fertiliser subsidies amounting to about Rs. 1,00,000 crore are pocketed by middlemen and traders. Fertiliser prices therefore need to be rationalised just like the diesel price.
The government should cut expenditure on itself, the administrative, travel and staff costs. But there should be no disincentive to investment in infrastructure. There has been a drop—in 2007-8, it was a little more than 38% of GDP while last fiscal it was 35%. Private investors should be provided sufficient inducement to invest with faster and more decisive government intervention. The emphasis should be on the building of new cities as promised, highways and ports. That will hike demand which in its turn will help economic growth, roping in an increasing number of public players in the investment arena.
