Corruption cost this
country Rs 250,000 cr. in the last10 years
The budget is dead,
long live the budget; It was not killed by Tehelka, as many people think.
It was killed by the stock market, which has been crashing ever since the
budget, and for very good reason. It is a wrong budget, at a wrong time
and it is going to play havoc with the nation’s economy.
But Yashwant Sinha is a
lucky man. The stock market crash has come at the right time for him. He
can now blame the crash as well as Tehelka for the disastrous results of
his budget. When he stands up in the Parliament next year – if he is
still in the government, and the government is still there – he will say
that he must not be held responsible for what happened after the budget.
It is like saying that the operation was successful, but the patient died.
I have been saying for
some time that the economy is in a state of collapse and there is nothing
the government can do unless it revises its disastrous free-market
policies. You go round the bazaars and you see the fall-out everyday.
There are very few customers in the shops, many of which do not open at
all. In one shop I know, daily taking have come down from a lakh a day to
six thousand. The man has three assistant’s who now twiddle their thumbs
and pass time drinking tea.
The s-called “new
economy” industries have also crashed. The Dot.com companies are closing
by the dozen, not only in India but all over the world. Software companies
are also down, because foreign buyers have cut down on their business.
Infosys shares are down to Rs. 4000, against 10,000 a few months ago. And
companies in Silicon Valley are downing shutters and sacking their staff
workers, including Indian Software programmers whom they used to woo until
the other day.
Where is Pramod Mahajan
now? You don’t hear much from him nowadays. Nor the great worthies who
believed that India was getting very close to paradise riding on the
software crest wave. The fact remains, as I have often said, that India
had nothing much to contribute to IT revolution except IIT graduates. They
could perform as long as they had jobs. And whether they had jobs depended
very much on the economic health foreign companies who employed them.
We should see things in
perspective. The IT industry is expected to have a turnover of less than
10 billion dollars this year, including six billion dollars of exports.
The bulk of exports are contract jobs depending entirely on orders from
overseas firms. Ten billion sounds big but it is less than 2 per cent of
India’s GDP. Ten billion dollars is worth around Rs.50,000 crore, which
is the turnover of Reliance
group. Can an industry worth no more than two per cent of GDP make much of
a mark on the economy ?
The total number of IT
workers is probably no more than 500,000 or, say, dying industry. There
are foolish people who argue that we don't really need an agriculture
industry. We can be a superpower in IT make so much money that we can
import all our food from abroad, and forget about producing anything here.
It is this kind of people who are advising the government at the moment.
But what has this to do
with Tehelka and the defence scam? Corruption cannot be compartmentalised
when it becomes a way of life, as it has obviously become. It breeds
middlemen everywhere, whether he is the brother of a clerk in the
municipality or the son of an MP.
When you are out to
make money, and have the right connections, you use them. If everybody is
monetising his or her assets, and if your only asset is your access to the
powers that be, and if you are not assailed by any principles or moral
considerations, you go ahead and make money, as politicians, bureaucrats
and businessmen did in the defence scam.
Before it came to
power, the BJP always gave the impression that it stood by certain
principles and it would not com promise them. This is what the Congress
had also done in Nehru's days. But after coming to power, the Vajpayee'
government suddenly went back on the party's policies, just as the
Congress had done under Narasimha Rao. Neither the Congress nor the BJP
has explained why they went back on "their own principles and why the
policies they were adopting were superior to the earlier ones.
They did not explain
because there was nothing inherently superior about their new policies.
And that is precisely why the policies failed. Five years of Narasimha
Rao's reforms did not benefit either the farmers nor those below the
poverty line. Foreign investment certainly went up, but so did prices.
There was no increase
in GDP growth rates and no increase in jobs. It is true that the upper
class made a lot of money, but it always does no matter what policies you
Once you take the
attitude that principles and ideals are for birds, and promiscuity pays,
you are sailing in dangerous waters. There is nothing to guide you and you
are on your own. You then come under the pressure of vested interests,
particularly those with deep pockets and Swiss bank accounts. These people
are everywhere, whether you are buying 01 selling, for it doesn't matter
what you buy or sell, as long as they get their cut.
So you have a new type
of government, a government running on commission. The commission agents
rule the roost, and often they are your own men, with links that go right
to the top. This happened in the case of Bofors and it is now happening in
the case of defence deals and privatisation of public sector units.
Those who believe that
no money has changed hands under the table in the case of Balco, the
aluminium company now in dispute, will probably never understand the
ramifications of the middlemen's community in the country, In the case of
Balco, the government was under tremendous pressure from foreign
investors, to privatise. The pressure was mounting as the budget
approached. The Balco sale got big headlines in foreign newspapers and it
was also mentioned by the finance minister when he visited Germany after
the budget as a great achievement.
At the same time, it
was anxious to see that Baico was not sold too cheaply. The Sterlite offer
came in very handy. Sterlite was also getting a big aluminiun plant for
next to nothing. It would have to invest something like Rs.2000 crore to
set up a plant of Balco's size. The deal was struck, but not without some
itching palms getting greased. Corruption is costing this poor country at
least 2 per cent a year in GDP growth. Since our GDP is now around 500
billion US dollars, it is costing us ten billion dollars a year, 01
Rs.50,000 crore. In the last ten years it has probably cost us over
Rs.250.000 crore, which is almost the size of the central budget. It is
actually costing us ten times as much as all other losses put together. It
is a pity that instead of curbing it, as it had promised, the NDA
government is actually promoting it!