Economy in a mess : Raghuram Rajan lists 5 burdens that the Modi government had inherited from the previous UPA government.
(a) A large number of infrastructure projects were stalled. This was because of difficulties in land
acquisition, lack of inputs like coal or gas or the slow pace of obtaining government clearances.
(b) The second problem was in power production and distribution. Existing power producers were
running into difficulties as heavily indebted power distribution companies delayed payments or
stopped buying. India experienced the absurdity of surplus power capacity even as power
demand went unmet.
(c) The third was credit drying up in the market. With more and more promoters running into
financial distress, bad loans increased on banks' balance sheets. As a result, the flow of new
credit slowed.
(d) The agricultural sector, too, was in a "mess". This was in part because of "decades of misguided"
government interventions like distorted pricing and subsidies which "resulted in anomalies such
as a water-short nation exporting water-thirsty rice".
(e) Failure to "eliminate hordes of middlemen who took their cut as food travelled from the farm to
the fork". Instead of spending its scarce resources on improving farmer access to new
technologies, seeds or land, the governments spent their resources on loan waivers. This was "a
form of misdirected cash transfer".
The government needs to address issues on a war footing and deal with the challenges.
Tailpiece.
It was the day of the Guruvayur Ekadasi. Lekha and I had gone to the market, around 1000 hrs to buy grocery after which she went to the temple and I'd returned home. Suma kunjamma, my cousins, Kala, Santhi and Sindhu reached home by sunset. They were dropped at the railway station to board the Guruvayur - Chennai Egmore express, after dinner at home.
(a) A large number of infrastructure projects were stalled. This was because of difficulties in land
acquisition, lack of inputs like coal or gas or the slow pace of obtaining government clearances.
(b) The second problem was in power production and distribution. Existing power producers were
running into difficulties as heavily indebted power distribution companies delayed payments or
stopped buying. India experienced the absurdity of surplus power capacity even as power
demand went unmet.
(c) The third was credit drying up in the market. With more and more promoters running into
financial distress, bad loans increased on banks' balance sheets. As a result, the flow of new
credit slowed.
(d) The agricultural sector, too, was in a "mess". This was in part because of "decades of misguided"
government interventions like distorted pricing and subsidies which "resulted in anomalies such
as a water-short nation exporting water-thirsty rice".
(e) Failure to "eliminate hordes of middlemen who took their cut as food travelled from the farm to
the fork". Instead of spending its scarce resources on improving farmer access to new
technologies, seeds or land, the governments spent their resources on loan waivers. This was "a
form of misdirected cash transfer".
The government needs to address issues on a war footing and deal with the challenges.
Tailpiece.
It was the day of the Guruvayur Ekadasi. Lekha and I had gone to the market, around 1000 hrs to buy grocery after which she went to the temple and I'd returned home. Suma kunjamma, my cousins, Kala, Santhi and Sindhu reached home by sunset. They were dropped at the railway station to board the Guruvayur - Chennai Egmore express, after dinner at home.
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