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economic issues weakly stated in manifesto



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[Topics under debate]: GOOD GOVERNANCE
___Help make this manifesto better, or accept it, and propagate it!___
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> PART II
> GOOD ECONOMIC POLICY
>
>Changing the economic system
>
>Over the last fifty years, governments in countries with fewer natural
and
>human resources than India have provided better opportunities for their

>citizens.

--- not always.. in any case, there is no quantification of natural and
human resources... one can just as easily take the Non-World Bankish
view
that instead of country league tables, we take each country on its own,
seriously, with its own history and problems to be solved... comparisons
are
all very well when thety are tight and well-argued... not vague
generalizations

All data conclusively points to the fact that rapid economic
>growth tends strongly to reduce poverty. What was therefore needed was
the
>creation of an environment suitable for the generation of rapid
economic
>growth.


>Instead, successive governments attempted to control the major sectors
of
>economy.

--- this is all OLD HAT in India now... EVERYONE agrees, including the
communists...

This has done more harm than good to India's citizens. While not
>promoting capitalism blindly, a first step has to be taken toward
changing
>the economic system by removing the word "Socialistic" from the
Preamble to
>the Indian Constitution. We need to shift toward a model of minimally
>regulated capitalism.

-- why the jump to socialism vs. capitalism now?   is changing the word
so
important?
  You can change the word but keep the action intact and vice versa..

>This will involve some of the following.
>1. Privatization
>Privatize (and liberalize) nationalized and other public sector
industries
>so that these organizations are brought in check by market forces.

-- what does this mean in concrete?  perhaps privatise the Satabdi
trains
for a start?  which aspects of them?  ticketing, service, food etc, or
sell
the bogies, timings themselves...?  what about Indian Airlines?  if you
cannot privatise, why not allow competition?

This will
>also give people better control over their destiny. It will promote
>competitive and risk-taking behavior, which is necessary, if the output
of
>the nation is to grow sufficient enough to bring fruits of development
to
>every citizen of India.

In particular, government ownership in the
>following sectors should be dissolved or highly reduced:
>
>Telecommunications,
Media (television  why should doordarshan be privatised if we already
have
Star, ZEE etc???

, radio   why not allow private radio too?

and print),   what major newspapers are owned by the GOI?? none.

All metal
>production and associated industries,
Power generation and distribution,
>State electricity boards, Automobiles, Cement industry, Banking,
insurance,
>fertilizer production, city waste management services, public transport

>services such as railways.


--- I said much of this in 1984 -- has anyone pinned it down with
further
facts since?  if not, why say it?

>2. Private ownership
>The principle of private ownership of everything - land, property

--- this is putting the cart before the horse... the first problem wrt
property in India is records and registration... i.e. we need an MIS as
to
who owns what!

and mental
>output (intellectual property) - has to be very strongly and clearly
defined
>and protected.

-- should Indians now, like Japanese, Koreans etc earlier, not reverse
engineer??


All ownership should of course lapse with time, such as the
>passing away of a person (through stringent inheritance laws), or
within a
>certain number of years.
>
>
>3. Price deregulation:
>In general, we abhor the concept of price regulation by government in
any
>productive activity that does not directly involve serving a government

>function.

-- what does this mean, if anything?

Government does not possess the local knowledge that is critical
>to the determination of a price.

--- agreed... something Hayekian known and stated in the Indian context
by
me, lal and I am sure others... but what is the import of it?
>
>Production Cost, transportation cost, Market Competition, Supply and
Demand
>should determine price of products. Government has no direct role in
fixing
>prices of particular commodities, instead,
>* it has regulatory powers, and social obligation to ensure Market
>Competition,
>* a good government works as a catalyst in promoting research &
innovation
>to improve methods to bring down production and transportation costs
thereby
>effecting

-- affecting

the pricing of the products.
>
>4. Deregulation of industry
>Wherever possible, to promote competition, deregulation needs to be
done.
>Internal deregulation needs to be done before foreign deregulation. The

>following sectors in particular need to be

deregulated:

banking,

--  what does this precisely entail?   why not denationalise?

road transport

-- are trucks not private?  what sort of regulation is being critiqued
here??

>5. Regulation against profiteering:

>Freedom afforded to the entrepreneurs to fix prices (of goods or of
labor)
>should not lead to profiteering.

-- does this mean speculation?

Therefore, strong (though participatory and
>democratic) regulatory bodies need to be established to monitor cases
of
>profiteering.

Regulation of monopolistic behavior should primarily be
>through promotion of domestic and foreign competition. Wherever
necessary,
>strong regulatory bodies, democratic in their composition, need to be
>instituted to regulate possible profiteering.
>Further, as far as wages are concerned, the government would not
interfere
>with this mechanism, except perhaps to suggest "desirable" levels of
minimum
>wage.

-- in what ways are present practices inadequate?  does anybody know?

>6. Collective bargaining by labor:


>In general, throughout the world, advances in productivity, not unions,

have
>been mainly responsible for the improvements in earnings and working
>conditions of the average worker. Despite this, as a part of the
free-market
>wage determination process, collective bargaining by firm-specific
labor
>unions will be encouraged. However, industry-wide or nation-wide
attempts
by
>unions to interfere in the wage bargaining process amounts to using
>oligopolistic or monopolistic practice by the labor force, and will be
>discouraged.

--- what does this rather general statement have to do with Indian
labour
conditions?

>7. Elimination of attempts to "plan" the economy:
>While we need strong supporting research organizations which will
provide
>relevant information to the Parliament and to the Government, we
definitely
>do not need any intermediary organization which runs "planning" models
which
>reek of futile and economically unjustifiable attempts at centralized
>planning. The Planning Commission has to be closed down, or converted
into
a
>much smaller but professional, Research Wing for the Parliament.

--- this is alll Old Hat I am afraid in Delhi...


>8. Independence of Central Bank
>The Reserve Bank of India should be made independent of control by the
>executive, completely out of political control,

and controlled by

dedicated >banking professionals --- ??? coming from nationalised banks?



-

 The aim is to run this organization in such a way
>that it constantly, honestly, and transparently, controls and manages
our
>monetary system. The bank should be completely free to research and
>implement the best possible monetary policy for India based on the
prevalent
>economic and market indicators. The only focus of the Bank should be to

>constantly translate economic indicators into the currency value, work
as a
>mirror to show the policy makers as well as the people as to where the
>inflation is going etc. at any point of time. This role of a mirror and
an
>honest agent that measures our economy, will allow our policy makers to

take
>swift actions to control our economy and watch it grow by looking at
the
>pictures shown by such impartial organization dedicated to always
report
the
>true picture. That is because inflation is the surest way to hurt the
lowest
>earning members of a society. Other economic goals, such as employment
and
>growth, should be purely under the jurisdiction of the executive.

---- -- instead of this stuff below, why not merely go back to the
original
RBI Act of 1935?    There is a definitive History of the RBI which must
be
referred to... and why no mention of monetization??


>
>9. Financial, Capital, and Foreign Exchange Markets
>Measures need to be taken to bring back small investors to the capital
>market by raising the transparency and accountability of listed
companies
as
>well as that of capital market intermediaries
>A market-responsive exchange rate would have to be put into place,
>determined by fundamental demand and supply factors.
>The numerous controls and impediments to the setting up and functioning
of
>the derivative markets would be removed.
>Constraints on hedging of exposure on international markets will be
phased
>out.
>Modern, well-regulated, forward and future markets are essential for
>efficient management of risk, and would be established jointly with the

>suitably qualified citizens.

---- there are studies and studies and studies on Indian capital
markets....
why no reference to them..??

>10. Following prudent fiscal and monetary policies.


>The central and state budgets would be brought into balance.

--- this is like saying  we want India to win the World Cup -- in
soccer.

Inflation would
>be kept under strict control by allowing the Central bank to use
interest
>rate as the key policy instrument. Real interest rates would be kept at
the
>lowest possible levels to boost investment.

-- this is really rather weak macroeconomics...



>11. Intellectual Property Rights
>The patents machinery in India to be tremendously strengthened and
>intellectual property rights vigorously enforced. No innovation can be
>supported without this basic institution.


--- why should Indians not reverse engineer?  rather than follow Western

dictats on this??

>12. Social Safety Net
>Due to the unleashing of innovation and creativity consequent to the
shift
>of economic incentives, incomes of individuals can be expected to
become
>more variable over the course of time. While re-training of those who
are
>deemed surplus in a particular sector of the economy is a desirable
>objective, it is costly as well as time-consuming. Therefore a social
safety
>net in the form of unemployment insurance and social security systems
has
to
>be immediately brought into place, mostly fully-funded rather than
>pay-as-you-go, with some progressivity built into it.


-- this is rather vague multilateral bankish stuff... what specifics??


>13. Equity through elimination of poverty
>Inequalities of income are a necessary outcome of a society geared
toward
>the production of wealth. However, poverty is not. The focus of the
modern
>Indian society will have to be geared towards ensuring the complete
>elimination of poverty.
>While the growth of incomes would substantially bring down poverty,
there
>would remain many cases where direct tax credits and other direct
subsidies
>would need to be applied to those who are unable, for no fault of
theirs,
to
>cope with the changed economic environment. Priority would be accorded
to
>easy access to credit finance and occupational assistance to help turn
>around the lives of those with genuine needs. More importantly,
subsidized
>education will be provided to those who are disadvantaged.


--- again the same... vague multilaterilish stuff.  too vague to be
debated
or useful.


---- I can go on and on... my same comment applies as before: all this
is
quite worthwhile as an endeavour but far from being concrete, realistic
or
useful as a basis of political discussions..
>
>14. IT Policy
>In the information age ( that is what the 21 century is going to be
called),
>access and control of information is going to be the key to determine
>success or failure of individuals and societies. In recognition of
this, we
>must provide the
>greatest support in enabling innovation and growth of information
>technology. India must redefine the way  information is gathered used
by
the
>government in carrying out its duties towards improving the lives of
the
>people. Key institutions for Research and Training in new technologies
must
>be promoted and sustained at the highest level. India must strive to be

>innovator of new technology rather then perpetuating the constant
dependency
>on the outside world in this vital future sector.
>
>
>15. Agricultural policy
>Phased, but complete removal of agricultural subsidies. Enacting
Policies
>and Programs to encourage best practices of growing crops. Full
financial
>and logistical support to Indigenous agriculture research. Organic,
natural
>methods to be promoted to ensure healthy safe produce and to stop
"burnout"
>of good, fertile land for the long term.
>16. Greater role of the government in provision of public goods
>The government needs to focus attention on education, infrastructure,
urban
>planning, and the environment, and the task of regulating,
standardizing
and
>quality control in the interest of the consumer.
>a) Urbanization:
>The magnitude and quality of urbanization is a sure and foolproof test
of
>economic development. Urbanization promotes economic efficiency in all
>fields of human endeavour by bringing together a critical mass of human

>beings specializing in various sectors of the economy. Efforts should
be
>made to urbanize India and change the hitherto prevalent tradition of
>pulling Indians to just a few, unplanned, congested urban centers.
>Urbanization should not mean vacating villages and growing slums around

>Mumbai and Delhi. Rather,  it should mean planned development of
localities
>across the nation, where there are roads, schools, proper and planned
>housing, and a good mix of industrialization and agricultural activity,

>while, at the same time, protecting the environment, wildlife and
sufficient
>green forest cover aimed at maintaining good quality of life and living

>across the nation and not just in a few "urban centers".
>b) Infrastructure:
>The role of government is critical in the provision of infrastructure,
whose
>benefits are reaped by all, and so, costs have to be borne by most.
Resource
>constraints can be partially met by involving the private sector in the

>entire process of construction and maintenance. However, even where
such
>solutions are not feasible, government should not directly construct
and
>maintain any structure, but sub-contract these services to private
vendors.
>All direct construction activities by government agencies, either
>departments or public sector agencies, would be closed down. The Public

>Works departments would purely sub-contract and monitor the work of
private
>agencies. There would be very few limits on the potential size of
private
>companies in the infrastructure sector, to allow economies of scale,
while
>promoting competition.
>The focus would be on the creation of additional capacity, sufficient
to
>meet the highest expected demand at the highest anticipated growth
rates of
>the economy.
>In all cases the "User Pays Principle" would operate. Nobody would be
>subsidized indirectly. If any farmer or entrepreneur has to be
subsidized,
>that would be done directly, through the Social Insurance program,
where
>people can easily read the total subsidy received by anyone.
>c) Environment:
>There is tremendous role of government in environmental planning
including
>protecting and helping maintain a healthy wildlife population in their
>natural habitats, as well as securing a good portion of land to retain
green
>forest cover, untouched by modern development such as sprawling
>urbanization, industrialization or agriculture use. The government
should
>set strict guidelines regarding hazardous waste disposal, and
maintaining
>clean water and air. There should be provision  for stiff penalties to
>violators of such laws. There needs to be an independence organiztion
of
>environment experts and scientists, a Environment Protection Agency,
which
>would constantly monitor and setup guidelines for helping protect the
>environment while still remaining sensitive to developmental needs of
the
>growing society.
>
>d) Standardization and quality control:
>There should be separate federal agencies to set standards of quality
on :
>
>1. Food products.
>2. Consumer Products of all kind.
>3. Automobiles
>
>Such agencies should be equipped with specialist expertise to make best

>decisions on setting up safety standards, as well as statutory powers
to
>enforce such standards and penalize and discipline the violators. Such
>agencies are almost non-existent  in India today, and the citizens live
on
>the mercy of the entrepreneurs supplying food and other products in the

>market, with little or no quality control from any government agency.
>


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