Austerity is a good idea in economics. But the Congress is faking it. The brazen ostentation of two Congress ministers in enjoying their first hundred days in five-star hotel suites has exposed the ruling party’s soft underbelly. This was followed by another expose in The Indian Express (September 16) that UPA ministers want Spanish tiles in office rooms and Italian porcelain in their toilets. The CPWD, the report said, was flooded with requests from ministers for urgent renovation of houses and offices. Perhaps, these ministers were under the impression that India has to play its role in European recovery.
Sonia Gandhi was not impressed by her ministers’ elitist ways. And the party’s kneejerk response at austerity has made it a laughing stock. In the wake of recession, the economists suggested spending as the new mantra, though there was nothing new as the West has all the time promoted it. India too joined the bandwagon by announcing three stimulus packages. Without changing their basic nature of saving, the Asian economies have made an astonishing rebound. In a market economy, they say, consumption is the engine of growth. In these columns we have opposed this craze for unsustainable consumption. The first step in austerity is to avoid needless spending. The Congress has made the whole debate into a political stunt by reducing it to a few icons of the party ostentatiously travelling economy class. The question the Congress has to answer is if the party leadership is satisfied by enacting such tamasha in a year of world recession.
The country is facing an unprecedented drought. The price of food is galloping by the day and according to the National Sample Survey (NSS) of the government 700 million Indians live on less than fifty rupees a day. Estimates have shown that 80 per cent of India’s wealth is concentrated in the hands of less than 100 million people and these are the real spendthrifts and shopaholics. The UPA in the last five years followed a pro-rich policy whose emphasis was on encouraging consumerism through various tax-cuts, incentives and creating a wellness euphoria.
Now, with great media glitz Sonia Gandhi travels economy class on a visit to Mumbai and her son Rahul travels by chair car in a train journey to Ludhiana. The party wants its ministers and Members of Parliament to follow suit to convey the message of low living and high ideals. This way, the high command believes, the party will be able to convince the common man that it is sharing his burden and sympathising with his agony. One only hopes that Sonia Gandhi will continue the lead by setting new examples like surrendering at least a few of the sprawling bungalows of high market rental values her family has been occupying in the posh New Delhi area for the last two decades. According to an estimate, the Congress and its tributary organisations have cornered as many as two dozen central Delhi buildings for the last many decades. The party has perfected the art of using power for the aggrandizement and comfort of its leaders. If it is serious it can also reduce the size of the airbus cabinet Dr. Manmohan Singh is presiding over.
RSS is perhaps the only mass movement in the country which has made simple living part of its training. If the Congress is serious about promoting austerity, it can ask its workers to take an internship with the Sangh. The uniqueness of the Sangh is that from its top leaders to ordinary workers, the same austere lifestyle is practised.
Most ministries have become redundant, in fact, that was the promise of liberalisation. This aspect was covered in great detail in two installments in these columns earlier. Rather, the downsizing of the government has become a far cry under the UPA, and more than 80 per cent of government spending is on maintaining its paraphernalia in good shape. The perks and privileges of the ministers and the people’s representatives are many times higher than their salary. As a measure of austerity, it will be a good beginning if the government decides to do away with all the perks and privileges of politicians and top bureaucrats in government and public sector and reward them by increasing their salary by say, four fold. Still, I am sure the country will save thousands of crores. Conspicuous consumption has become a habit with politicians. They live high, their children study and settle abroad, still year after year, their assets grow manifold as they themselves confess in their wealth declarations before the Election Commission. There is no exception to this trend. During the first term, at least on two earlier occasions, the Prime Minister had announced austerity measures including curbs on compulsive foreign travels. But there was no visible impact. Can the government convince the public that it is serious this time?
Frugality arguments sound hypocritical in the face of lavish iftar parties the Congress ministers are hosting in luxury hotels. The fact is there is no accountability in public life. Then there is the other aspect of the impact of misplaced frugality on economic stimulus. India has not completely insulated itself from world recession. Consumerism and excessive spending are being increasingly promoted as the pre-requisite for recovery. The latest Newsweek (September 21, 2009) based on a study by Boston Consulting Group suggests that the future growth of the global economy will largely depend on how the untapped spending power of women on cosmetics, beauty industry, health and education is encouraged. This study claims women in the emerging markets could save the world from recession, through their higher spending. Citing another study by the National Bureau of Economic Research, it said, in rural India within six months of getting cable TV, men and women alike had become more open to the idea of women’s autonomy and more accepting of female participation in household decision-making. Women make the majority of world’s purchasing decisions, which, according to BCG, is some $12 trillion of the world’s $18.4 trillion in annual consumer spending and that percentage will likely rise as a new upwardly mobile class of young female professionals overtakes its male peers in developing countries.
Obviously, the Congress cannot be serious or convincingly carry on with its cosmetic austerity façade. Either it will have to reverse the world trend or Indianise its economic thinking on lines of Gandhiji, Deendayalji and Swadeshi. For the world, market is money and there is where growth is determined. Capitalists often claim that somebody’s expenditure is somebody else’s income. Another form of trickle-down effect. They say, talk more, spend more, as if there is no tomorrow. The Indian says hold your purse, for a rainy day, save today, to spend when you need it the most. This is the disconnect, dichotomy of two parallel worldviews.
The Congress has a choice, it can fake and get beaten or turn the economic thinking back on Indian values.
(The writer can be contacted at editor@organiserweekly.com)
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