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Bharatiya Janata Party
National Council Convention
Rajmata Vijaya Raje Sindhiya Sabhagar,
Kushabhau Thakre Parisar,
Indore (Madhya Pradesh)
18th and 19th February 2010

Economic Resolution

The Bharatiya Janata Party expresses its gravest concern at the ever spiralling price rise in the country and the complete failure of the Congress party led UPA government at the centre to control it. It notes with dismay the fact that the consumer price inflation in India today is the highest among all the countries of Asia-Pacific. Prices for industrial workers shot up by 14.97% in December 2009 compared to December 2008, the highest in eleven years. For agricultural workers the rise during this period was 17.21%. Similarly the Wholesale Price Index has shot up to 8.56% in January 2010 - the highest in 13 months. Prices of rice and dal, wheat and other cereals, vegetables, specially onions and potatoes, edible oils and sugar, milk, kerosene, cement, steel and other building materials and fertilisers  have all gone through the roof in the last few months. Tur dal has already scored a century and sugar a half century.

This murderous price rise is the single most important issue in India today. It is directly the result of the criminal negligence of the Congress party led UPA of its governance responsibilities and its promises to the people.

While price rise no doubt is the single most important issue today, there are other major areas of concern in the economy also. Economic policy making in India has never been easy, given its huge diversity. Therefore, the key to economic policy making is and must always be balance - balance between income and expenditure in the budget of the government, balance between economic growth and inflation, balance between growth and development, balance between growth and employment generation, balance between the urban and rural areas, balance between agriculture and industry, balance between the rich and poor, balance between the more developed and less developed regions, balance between the present and the future, balance between economic growth and the environment, and balance between the national and the global. In order to establish a proper balance a tilt in favour of the weak and against the strong is entirely justified. This alone will ensure Antyodaya which basic tenet the BJP believes in, unlike the Congress party which believes in Amirodaya and makes a fool of the aam admi. Fundamental to all these balances is the balance in the union budget. Unfortunately, the politically unbalanced UPA Government, both in its previous incarnation and the present one, with authority tilted against the Prime Minister and in favour of the President of the Congress party, has destroyed the equilibrium of the Indian economy.

The UPA government had inherited a robust economy when it assumed office for the first time in May 2004. Its own Economic Survey of July 2004 said, "The economy appears to be in a resilient mode in terms of growth, inflation, and balance of payments, a combination that offers large scope of consolidation of the growth momentum with continued macroeconomic stability". Yet, it is this macroeconomic stability which became a casualty as a result of the mismanagement of the economy by the Congress party led UPA government in the subsequent years. The Economic Survey of 2007-08 put it succinctly when it noted "The decisive change in growth trend also means that the economy was, perhaps, not fully prepared for the different set of challenges that accompany fast growth". In other words, the government of the day did not prepare the economy to face the challenges posed by faster growth. All the present ills of the economy, including the unbearable price rise, are the result of this mismanagement. The UPA government wasted the good years in just celebrating the high growth for which it itself had done nothing and failed to put a roof over its head when the sun was shining. So, when the rain came, it was totally unprepared for it. And all this happened under the charge of a Prime Minister whose only claim to that post is that he is a distinguished economist.

It is now accepted by all commentators that the Indian economy went into a downturn well before the global financial crisis which erupted in September 2008.The government could not properly handle the overheating of the economy as a result of high liquidity in the system largely contributed by foreign inflows and the high demand generated by the high growth recorded by the economy. It surrendered before these challenges and did what it should not have done namely, use the hammer of monetary policy to squeeze liquidity out of the system thereby killing both investment and consumer demand. The global financial crisis came in handy to provide a cover to the government to hide all its misdeeds. It also gave it an excuse to recklessly open its coffers in the name of a stimulus package which was more in the nature of liberal hand outs in an election year to subserve its narrow political interests. It raised its budgetary deficit to unsustainable levels and had to borrow Rs. 3.1 lakh crore in 2008-09 and is budgeted to borrow Rs. 4.5 lakh crore in the current year if all goes well. But clearly all is not well. Its revenue receipts are likely to be less than the budget estimates, the expected realisation of Rs. 35,000   crore from the auction of 3G spectrum is not likely to materialise in this financial year and its expenditure may exceed the target. The C&AG has already commented adversely on the fraudulent budgetary practice of concealing the actual deficit by showing expenditure on petroleum, food and fertiliser subsidies below the line.  In order to keep the deficit under control the government has hit upon a novel idea - to change the base year, recalculate the GDP and keep the deficit low in at least optical terms. The seats the Congress party has won in Lok Sabha have come at a huge cost to the country.

A natural consequence of unbriddled budgetary deficit is inflation. If it is further compounded by mismanagement on the supply side, it fuels inflationary expectations and leads to sky rocketing prices. This is exactly what happened last year and continues to happen even today. What is worse is the fact that this price rise is mainly taking place in food articles and other essential commodities which is causing untold misery to the common man. The Economic Survey of 2007-08 had identified inflation and exchange rate management as the twin challenges facing the economy. But the government slept and did precious little to tackle inflation which remains the most important challenge even today. What further proof is needed of the utter incompetence of the present government?

The government has been offering one alibi after another for this price rise. The first is the drought which affected parts of the country during kharif 2009. It is true that a drought did affect production of kharif crops but according to government's own estimates, food grains production has declined by only eighteen million tonnes. In 2002 when the NDA was in power, food grains production had fallen by 40 million tonnes as a result of an unprecedented drought. But, the NDA government had adequately prepared for such a situation. We had, at that time, a stock of 66 million tonnes of food grains in our godowns. We could, therefore, freely give away food grains free of cost to the State governments to launch massive food for work programmes   in the drought affected areas, distribute food grains to the needy and vulnerable sections of society through the Antyodaya and Annpurna schemes of public distribution system and also make wheat available to the processing industry for making wheat products like atta, maida etc. In short, we flooded the market with supplies and kept both price rise and inflationary expectations under control. The rate of inflation during 2002-03 was only 3.4%.

If the government has sufficient stocks of food grains, as it claims it has, then it should follow the NDA government's example and similarly flood the market with supplies to control inflation. If it is not doing so we have to find the reasons why. And the reasons are not far to seek. The first is the complete lack of leadership and coordination in the government. While the cabinet is no doubt collectively responsible for all actions of the government, it is primarily the responsibility of the Prime Minister, both as Prime Minister and as the Chairman of the Cabinet Committee on Prices to hold the price line. The political responsibility rests with the Congress President who has appointed him to this post. It is these two who have clearly failed the country on the inflation front.

The second alibi for the current state of affairs was offered by the Congress party president herself.. When inflation raised its ugly head she blamed the Futures Market for it and the NDA government, which had taken the decision to set them up, along with it. She offered no explanation as to why the UPA government was not banning futures trading in agricultural produce. What she also failed to mention was the fact that the policies of the NDA government were designed to deal with a surplus economy. When the UPA government plunged the country once again into an economy of shortages it should have accordingly changed the instruments of policy instead of blaming the previous government. Thirdly it blamed global factors for the price rise. Fourthly, it blamed the state governments for failing to curb hoarding and profiteering. It deftly concealed the fact from the people that out of all the raids on unscrupulous traders carried out by the State governments 83% were carried out by the non-UPA State governments and only17% by the UPA ruled states. Ultimately, the ministers of the government have started blaming each other. The Prime Minister and his party is blaming the Food Minister, the Food Minister is blaming the Prime Minister and reminding him of the concept of the collective responsibility of the cabinet. It is a free for all.

Under duress and belatedly a conference of state Chief Ministers was called recently to discuss this issue. The Prime Minister described the present situation as cyclical. Nothing could be further from the truth. Winter is the time when prices tend to moderate as they should have done specially this year as the rabi crop prospects are bright.

The BJP believes that the most important reason for this price rise, apart from incompetence and lack of leadership in the government, is the rampant corruption at all levels in government. Members of the cabinet have made money through futures trading in the commodity markets. As our national President has already stated, out of a total transaction of Rs. 4.50 lakhs in the commodity exchanges only 1% rsulted in delivery, the rest was pure speculation. The sugar economy has been completely mishandled. 49 lakh tonnes of sugar was allowed to be exported when it had already become clear that there might be a shortage of sugar in the country. Even today, when sugar prices have gone through the roof, the government has allowed 10,000 tonnes of sugar to be exported to Europe. What can be more criminal? Nine lakh tonnes of imported raw sugar has been lying in the ports of Gujarat alone for months without being moved inside for further processing.  The import of wheat is a huge scam. Inferior quality wheat, unfit for human consumption, has been imported at a huge cost and is being largely wasted. The export of rice to some African countries is a first rate scandal, involving senior ministers of the government. The government has turned a blind eye to cartels being formed and has given a free run to the hoarders and profiteers. Nine lakh tonnes of salt is lying in Gujarat, ready to be moved, but the government of India cannot arrange railway wagons to move them; in the meanwhile, prices of salt continue to rise. The National Council of the BJP, therefore, demands that a Joint Parliamentary Committee should be formed without delay to enquire into all these acts of omissions and commissions of the gocernment.

The union budget's huge fiscal deficit is a matter of great concern. In the last two years, purely for cheap electoral reasons, the government has made a mockery of the Fiscal Responsibility and Budget Management Act passed by Parliament during the NDA regime. No effort has been made to control the ever rising and wasteful expenditure of the Government of India. The tokenism in the name of economy measures is like rubbing salt on people's wounds.

The agrarian crisis has further deepened. Agriculture continues to languish. The suicide rate of farmers continues to go up. He is not the beneficiary of this price rise. He is its victim. Lakhs of hectares of prime agricultural land has been forcibly diverted for setting up SEZs which is affecting agricultural production. The BJP believes that agricultural land should be used only for agricultural purposes and should not be diverted for non-agricultural use. Despite its tall claims, the last five years have been wasted years on the agricultural front. The Kisan has been the worst victim of this neglect. The latest example of this insensitivity is the increase in urea prices by 10% which the government has announced today. This will only add to the misery of the Kisan. The BJP demands that this hike should be withdrawn by the government immediately. Agricultural production has failed to keep pace with rising demand and precious little has been done by the government to improve it. The various schemes of the government to improve production and productivity have remained largely on paper.

Why is it that whenever the Congress party comes to power prices of every thing hits the root? What is the umbilical link between the Congress party and price rise? The National Council of the BJP believes that prices can be brought down if there is political will, administrative determination and honesty of approach. But, this is exactly what the Congress party lacks. The BJP demands that government take stern measures to effectively control prices over the next few days. Enough is enough. If the government fails to do so, the Party will be left with no alternative but to take to the streets in a big way and use all parliamentary tactics to force the government's hand. Perform or face the wrath of the people is the stern warning the National Council of the BJP would like to issue from Indore to the Congrss party president and to the Prime Minister and his colleagues.