The election is over and the new government will soon take over. Change of government does not mean that old problems are solved. But means that fresh solution can be sought to these problems. Postponing in addressing any of these problems will end up in a disaster. So what are the problems and how to deal with them?
Problem: Uncontrolled and unabated inflation over the last 10 years, prices of essentials have quadrupled. For example, a 75 kilogram of rice Kernel costed 75 Rs, two decades ago. Now a kilogram costs nearly 60 Rs. Cooking oil prices have shot through the roof and so are the prices of different lentils.
How to deal with it: If we don’t solve this problem, we will sooner or later face a social unrest. Look, whether it is due to growing demand or shrinking supply or both. Alternatively, look at the supply chain from production to the retail. Is it the price gouging or the enormous interest costs in the unorganized sector? Please don’t give false promises. Go and look at the daily newspaper of the last 6 months. Our Congress politicians and the so called economists kept misleading the people. Please don’t give us stories. You have enough forex resources, import and meet the demand. Break the local cartels and don’t blame the RBI. They don’t have tools to deal with the unorganized sector. Warren Buffet, the most successful stock trader called inflation as the number one enemy. It is worse than the enemies at our borders. If you can’t control inflation, tell us. We will cut consumption to bring the prices down.
Problem: Our spiraling budget deficit and debt
When you prepare the next budget, be realistic about what you or you cannot give it to the people. Please take people into confidence. The current reality cannot be washed away. Why do you have so many schemes for the rural population? Is it your vote bank? The easiest thing in the world is to balance the budget but to do that you need the courage to tell people that you don’t have money to spend. Don’t use the budget to syphon the wealth of the country. There is no gradual approach to reducing the deficit. Don’t compromise. Budget deficit is an evil and debt will destroy the future generation.
Problem: Current account deficit
Our exports of around 310 bln a year against an import of 500 bln and increasing. Our current account deficit due to trade is around 180-200 bln. But current account deficit is a small percentage of GDP. Software exports FII money, NRI money, external commercial borrowing and reduced importation of gold are all making their contributions towards reducing the deficit. Currently we have 310 bln dollars reserve and 430 bln dollars liability. See what needs to be done and act boldly
Problem: Recapitalize banks and don’t allow the NPA to grow. Go after people who are weakening our banking system. If necessary, go after the personal wealth of individuals who are cleaning up our banks
These are the short list of problems but every one of them can do an irreparable damage to the economy. Walk the walk, talk the talk but make sure that a common man does not have to carry the sins of a few selected people. Mr. Prime Minister, we are there for you. Be bold and courageous and act decisively. When you win, we also win.