Bharatiya Janata Party
1st & 2nd June 2008
Parliament Annexe, New Delhi - 110001
Resolution on Prices
Sky rocketing prices
UPA picking aam admi's pocket
The UPA government that came into being with the support of Left Parties has completed four years in office. It raised the slogan of protecting the interests of the aam admi. The irony is that in spite of the government being in the hands of a well known economist Dr. Manmohan Singh, the economy of the country has gone from bad to worse and the back-breaking rise in prices has turned the life of the aam admi miserable. The hand of the UPA government did never support the aam admi. In 2004 NDA left behind the legacy of a strong economy when it quit and UPA assumed power. The prices were under control, essential commodities were available in plenty and the economic indicators were projecting India as a strong developing country.
Inflation at 8.1%
The NDA government had inherited an economy that was on the verge of bankruptcy and a regime of shortages ushered in by a socialist line of thinking. With its visionary policies, the NDA government brought the Indian economy back on the rails and put it on a strong footing. As a Finance Minister in the Narasimha Rao government Dr. Manmohan Singh had helped to liberate the Indian economy from the clutches of socialist bondage. When he himself became the Prime Minister, it was natural for the people to expect that he will strengthen the economy further and take it to higher levels of achievement. But what happened? Big disappointment for the common man.
The NDA government ushered in a revolution in the field of communications. That is why today even the common man is able to afford a mobile phone. NDA liberated the country from the license raj. Cooking gas not only reached every home but its supply was also adequate and instant. Today the country is faced with not only the shortage of cooking gas but of kerosene oil even. The era of black marketing in cooking gas is back. Worse, this situation is a result of the policies of the Central Government which has deliberately not allowed the supply to match the demand for gas, in order to keep the subsidy bill low. The prices of life saving drugs and medicines are also sky-rocketing. The ever rising cost of education and price of power have added to the woes of the common man. It’s unfortunate that computation of Consumer Price Index (CPI) has been stopped since April 2008. As a result the WPI, the only statistical released by The Government does not correctly reflect the inflation. During NDA regime prices were under check and the economy was strong. Today the prices of essential commodities are touching the sky.
In the week ending May 17, 2008 the rate of inflation has peaked to 8.1% which is the highest during the last four years. On May 8, 2008 the inflation rate was 7.61%. The rate of inflation is rising week after week, yet it remains only a symbolic indicator of the rise in prices. The real situation is much more frightening. During the last four years the prices of essential commodities of everyday use by the common man have risen from 50% to 120%. The day-to-day life of the poor, lower and middle classes has become very difficult.
Why are prices rising?
The UPA government came into being out of an opportunistic alliance on the strength of a negative ideology. The "economist" Dr. Manmohan Singh has failed as a Prime Minister. In the name of "Common Minimum Programme (CMP)" the Left Parties have enforced their own agenda and CMP has been devoured by CPM.
The economy was strong during NDA regime. If it has deteriorated and the prices are rising and spreading their wings like wild fire, the weak leadership of UPA government is only to be blamed. The tenure of UPA government has throughout been marred by internal strife and blackmailing by communists. The government is wasting its time and energy in political vendetta against its political opponents.
To cover up its own failures the UPA government is alleging that NDA is trying to draw political mileage out of the rising prices. A statement was issued by the PMO appealing to the political parties not to politicize the helplessness of the people. What does the government want? The aam admi should continue to be crushed under the unbearable weight of prices and the opposition parties should just sit idle? If the opposition does not to raise its voice against the wrong policies of a government, what other role it has in a democracy?
The government is trying to escape the blame for its failure to rein in rise in prices in a ridiculous manner. First the "economist" Prime Minister said that because of the policies of NDA the pace of development was slow and prices continued to rise. If Dr Manmohan Singh holds the policies of the NDA government responsible for rising prices, it only means that the politician in Dr. Manmohan Singh is overshadowing the economist in him. But it was the Economic Survey issued by his own government after taking over in 2004 that put paid to what the Prime Minister later alleged.
According to the Economic Survey, 2003-04 (presented in Parliament by Finance Minister Shri Chidambram):
“The economy appears to be in a resilient mode in terms of growth, inflation, and balance of payments, a combination that offers large scope for consolidation of the growth momentum with continued macroeconomic stability. Real Gross Domestic Product (GDP) is estimated to have grown by 8.1 per cent in 2003-04, buoyed by a strong agricultural recovery of 9.1 per cent from the drought-affected previous year. A growth rate higher than 8 per cent has been achieved in the past in only three years: 1967-68 (8.1 per cent), 1975-76 (9.0 per cent) and 1988-89 (10.5 per cent).
The annual point to point inflation rate in term of WPI declined significantly from 6.5 per cent in 2002-03 to 4.6 per cent in 2003-04. During 2004-05, the inflation rate for the week ending June 12, 2004 stood at 5.89 per cent compared to 4.97 per cent in the corresponding period last year.”
Economy under NDA
Shri Narsimha Rao had assumed office at the Centre when Indian economy was on the verge of bankruptcy. During the past 15 years China, in comparison to India, was making great progress and its rate of growth had touched 9%. The main reason for this high growth rate was the adoption of market economy by Mao's successor Deng Jio Peng shedding its dependence on Marxism. For the slow rate of growth from the sixties to nineties in India the fault squarely lay only with the so-called "socialist policies" of Nehur-Gandhi Congress. In reality, this Congress brand of "socialism" had become synonymous with corruption, favouritism, nepotism and crony capitalism.
The facts during NDA rule tell a different story. The NDA government led by Shri Atal Bihari Vajpayee took office in March 1998. In 1998-99 the GDP growth rate was 6.5%. Next year this government fell. After election Atalji returned to power under a new alliance. New programmes and policies were launched and the consequential results have no parallel. By the end of the next four years, the growth rate in GDP had touched 8.5%.
Now let us ponder over other parameters. During the last three years of NDA government, i.e. 2001-02 and 2003-04 the rate of domestic savings went up from 23.5% to 29.7%. During this very period the rate of capital generation also increased from 22.9% to 26%. The six year NDA regime had helped the country to transform the economy from that of shortages to surpluses. Looks like we are back to the old bad days.
Government's baseless logic
The government seems to be more interested in finding scapegoats than seeking solution to the problems. The Prime Minister, as also the other government functionaries are misrepresenting the facts by alleging that the State governments are responsible for the rise in prices. The Prime Minister says that it is the duty of the State governments to control prices. The Congress according to Dr. Singh is ruling in much lesser States than the non-Congress parties and therefore it is becoming difficult for the Central government to control prices, as the non-Congress ruled states, according to UPA allegation, are not cooperating. If there was an iota of truth in this logic, then there should have been no rise in prices at least in the Congress and Communist ruled States. West Bengal is suffering from acute shortage of food grains. Food riots have taken place outside PDS outlets in West Bengal.
False logic of middle class prosperity
What the American President has said about the food habits of Indians now, UPA Agriculture Minister had put forward this illogical argument much earlier. Defending the UPA government in Parliament on April 15 Agriculture Minister Sharad Pawar stated: "Because of the government policies the purchasing power of the people living below the poverty line has increased and that is why the demand for food grains is increasing".
In India the per capita food grains consumption is only 178 kg which is one-fifth of what it is in America. Per capita poultry consumption is 1.9 kg. The irony is that this statement of Shri Sharad Pawar came at a time when 78% of India's population is cursed to live on an average earning of Rs.20/- per day. The per capita food grains consumption which in 1991 was 460 gm has come down to 412 gm in 2005-06. Consumption of pulses is just 33 gm.
According to a report of National Sample Survey Organization published in January 2008, about 19% of our population was living on just Rs.12/- a day in 2005-06. 44% people in Orissa and Chhattisgarh, 29 to 30% in Madhya Pradesh, Jharkhand and Bihar do not have even 12 rupees for their living. In urban areas 22% of the population earns Rs.580/- per month, meaning thereby that they do not have even Rs.19/- per day to live on. The percentage of such people living in urban areas of Orissa and Uttar Pradesh is 36 to 38% while it is 56% in Bihar who spend this much on their living.
Between 1990 and 2007 the population of India increased by 1.9%. During this very period the increase in food grains was just 1.7%. It only means that in India the per capita food consumption went down. About 65 crore Indians are directly dependent upon agriculture. In 2005-06 the share of agriculture in the GDP was 19.7% which in 2006-07 went down to 18.5%. It clearly means that there was no decrease in the ratio of population dependent upon agriculture and that is why the poverty in this field is increasing as compared to those engaged in industry and service sector. The suicides by kisans continue unabated. During the year so far about 200 farmers are reported to have committed suicides. According to the latest report of National Sample Survey Organization, about 4.30 crore farmers of the country are under debt.
International market responsible for rise in prices?
The government is trying to hammer home the message that as the prices are rising in the international market, we should learn to live with this phenomenon. The logic of the Indian market being influenced by the international market would have appealed had there been any weightage to the export of food grains from India in the global market. The share of India in the global market is just 1%. If the government considers the phenomenon of prices is dictated by the world market, then the level of wages should also have been at the same level. There cannot be parity between the low wages and earnings of the majority of the people in India and the prices the world over.
UPA gains as world prices rise
During the UPA government prices of petrol-diesel have been increased eight times. In May 2004 during NDA regime the price of petrol was Rs. 30.25 per litre which has risen to Rs. 47/- per litre today. The diesel which was then available at Rs. 29.40 per litre is today available Rs. 33/- per litre. The UPA government is making the burden of the common man unbearable. In the year 2004 the revenue earnings from petroleum products was Rs. 70,000 crore. In 2007-08 it has jumped to Rs.1,70,000 crore. This situation is only swelling the coffers of the government on the pretext of increase in prices in the world market.
Reasons for Inflation
The government is putting forward lame excuses for the rocketing prices. Most of the time of the UPA government is consumed in sorting out its internal bickerings and dealing with the blackmailing techniques by Left parties. It is wasting its time, money and energy on political vengeance against its opponents. During the Gujarat elections UPA government was all the while trying to sideline the BJP on Gujarat riots. Political mud-slinging continues unable against NDA Government George Fernandes. The directionless politics of UPA have derailed the economy. If the government today finds itself off the mark, the reason is that while the Prime Minister has his foot on the accelerator, the Left parties have their foot on the brakes while the steering is in the hands of the super PM. This government is suffering from a paralysis caused by internal contradictions and its incompetence to deal with the serious problems like rising prices. The Finance Minister has already expressed helplessness in dealing with this situation. The sooner the aam admi shows the door to the UPA Government better it is for him.