August 28, 2013
Saugata Roy speaks on the economic situation of the Country
Sir, I know that I have brief time at my disposal. So I shall not indulge in either theatrical gestures, nor in verbose vocabulary. I shall also not refer to the ‘has been’ or ‘wants to be’ Finance Minister’s theories. As far as the Left is concerned, I think they have become irrelevant in India as also in the world. But I shall try to look at the problem as it stands today. Left is totally irrelevant in India as well as in the world…. Look at your own condition. You lost power in two States.
It is a rejected philosophy. Now, I will give you the alternative. Listen to me. I remember 1991; Shri Yashwant Sinha had been the Finance Minister for a brief term. He made a name for selling the country’s gold to the Bank in London. He was succeeded by Dr. Manmohan Singh as Finance Minister and Chidambaram as Commerce Minister. This team had only 15 days’ of foreign exchange in hand. They decided to open up the economy, liberalise, and then go to IMF for help. I would say that they succeeded to a great extent; at least the crisis was passed. But now it seems that the same Manmohan, Chidambaram team is in place, but nothing seems to be working. Look at the way rupee is falling with respect to the dollar.
Sir, you would know that in January, 2012 it was 50 rupees to a dollar. In February, it was 48.97 to a dollar. In July, it became 60.86 rupees a dollar. Today, dollar breached 66 rupees’ mark briefly to come back to 65.3 rupees. Listen to whatever Mr. Chidambaram says very carefully. He tries to assure that all is right in the State of Denmark. I shall come back to that. All your statements are here, Mr. Chidambaram.
Sir, I have had the opportunity to read his statements. I attended the Finance Consultative Committee meeting on 17th June where we had discussed the current account deficit. He said “Do not worry. I shall manage the current account deficit with FII and FDI inflows”. That is his recorded statement. Where is he managing anything?
I appreciate the confidence displayed by the hon. Finance Minister if he can say all these things when rupee has reached 66 to a dollar; if he can say this when current account deficit is 4.8 per cent of the gross domestic product. That is not all. One Delhi newspaper publishes everyday a small column called ‘The Slide Show’. The Slide Show shows how things are sliding under Dr. Manmohan Singh and Mr. Chidambaram. The BSE Sensex fell from 18,600 points to 18,558 points and rupee fell by minus 1.74 to 64.30.
Everyday this fall continues. People are taking debts in the market as to when the rupee will cost 70 to a dollar. It is a very alarming situation. I will come back to this main problem of current account deficit. But there are worries. One of them is growth. The growth was averaging above 8 per cent between 2003 and 2011. Now, it has come down to 5 per cent in the last quarter. Growth is down. Index of industrial production is almost negative. Mr. Chidambaram said about two months ago that green shoots are appearing in the economy. Mr. Chidambaram I have not seen the green shoots, pardon me. After that there has not been a single index of improvement in the economy. I am not talking of a long-term theory. Let us take the situation as it is today. Sir, you will understand what this current account deficit driven fall of the rupee means. It means that whatever you import will be costlier. Petroleum products will be costlier; gold will be costlier – it is made further costly by duties – and coal will be costlier. To travel abroad, you have to spend more. So, if you want to improve exports and go abroad, then you have to spend more.
If you have to send your children abroad, then you have to spend more. If your industry depends on some imported components, then it has to spend more. So, the fall of the rupee is having a total impact, across the board, on the Indian economy. This is something which Shri Chidambaram’s magic has failed to touch. Sir, I remember the nursery rhyme:
“Humpty Dumpty sat on a wall.
Humpty Dumpty had a great fall.
All the king’s horses and all the King’s men couldn’t put
Humpty Dumpty together again!”
It seems that is what has happened to the Indian rupee. Shri Chidambaram, with his huge Finance Ministry, the Chief Economic Adviser and the Reserve Bank of India, could not stop the fall of the rupee, not even rein in Now, what impact is it having on the market? This is having an impact on the Wholesale Price Index. What is happening to inflation? The month end prices in July, 2013 when compared with the corresponding month of July, 2012, as reported from four metro cities, show that the retail price of onion increased in the range of 112 per cent to 171 per cent. Gari Aadmi, jo Roti Piyaz khata hai,thoda aachar khata hai, uske liye piyaz 80 rupeye kilo ho gaya. They are speculating that the price of onion will cross Rs.100. Some Minister is saying that we should not ban the onion export. But what are you doing about controlling prices? Then, in the case of wheat, the increase is in the range of eight to 12 per cent; in the case of rice, it is in the range of 10 to 20 per cent. During this period, the price of masoor dal increased from three to 15 per cent and the price of moong dal from eight to 12 per cent. So, the value of rupee is falling; growth has fallen; the Sensex is falling; and prices of essential commodities are rising.
I agree that when Shri Yashwant Sinha or Shri Chidambaram says that there are no quick fixes in economy. I also think that there are no quick fixes in economy. Shri Chidambaram speculated on FDI coming in. Now, he has opened every sector to FDI. We protested in this House against FDI in retail. I would like to know how many big foreign multi-national retail giants have come in. Has Walmart come in? I heard that Carrefour has opened a shop but no retail giants have come in during the last year. Now, it is said that the regulations have to be changed. You have opened the telecom sector one hundred per cent to FDI. How much telecom inflow is coming in? In fact, telecom inflow has come down, and what else. Your Commerce Minister wants the Defense sector to be opened to FDI and let the foreigners to manufacture our own defense equipment. This is not the solution. Yes, we need FDI; we need even FII but that will not solve the problem.
So, the situation is very serious and grave. There is no growth, inflation and rise in prices. Many will ask as to what is the solution. The main problem in the country for the past few years has been that we have not released the forces of production in the country. Look at coal. We are importing Rs. 1 lakh crore worth of coal; and our coalmines are held up just because in the UPA regime, there has been corruption in distribution of coalmine licenses, Ministers’ names are being called. The Supreme Court is monitoring it. Now, the Supreme Court, I would say, is holding back progress in the country. Let them look into corruption but let new licenses be given, let the Coal India start production in the mines.
Secondly, Sir, look at petroleum – Krishna Godavari Basin. Why are they not able to increase the petroleum production and the gas production in the KG Basin? It is because the Reliance Industries and the Government are fighting over the price of gas. Different Groups of Ministers and different interests are coming in. But petroleum, which we have to import at a high cost, is not been explored. What about the iron ore? India, which is the iron ore surplus country, is having to import iron ore. There can be no export of iron ore from Karnataka; there can be no export of iron ore from Goa.
Lastly, see, how many projects in this country are held up just because of environment and forest clearances? This is the new racket in the country that you have to pay money to get E&F clearance, and as a result, even highway projects are being held up. You have not been able to release the full productive forces in this country as you are hoping that the foreigners would come with their FDI and FII in. The only thing is that sometimes, these Ministers sound like Churchill. When the Britain was losing in the Second World War, he said: “We shall fight them on the beaches; we shall fight them wherever… till the New World with all its power comes and rescue us.” It seems that our eyes are westward. We say that ‘let the Americans come and rescues us’. But our investment, which could have come to India, has gone to America because the American Economy is looking up a bit. That is not the way.
I believe that there are no quick fixes. But I want an assurance from the hon. Finance Minister. When and where would the fall in the price of rupees related to dollar stop? When would growth resume its path? Unless you can answer the question of unemployment, no Food Security Bill will be able to rescue the Government.
With these words, I conclude. Thank you, Sir.
