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Vilifying private enterprise threatens to push back India to the 70s

The first thing economic growth requires is trust, stability and law and order. If India continues on the path of political opportunism and populism pandering to one set of private producers' unjust demands, it is doomed to be trapped forever in the low-income category

December 30, 2020 / 08:35 AM IST
REUTERS/Ajay Verma (INDIA - Tags: AGRICULTURE BUSINESS) - RTR3381E

REUTERS/Ajay Verma (INDIA - Tags: AGRICULTURE BUSINESS) - RTR3381E

The farmers' protest against the Farm Laws, 2020 passed by Parliament is stuck in a prolonged stalemate. A few farmers’ unions have taken the adamant position to repeal all the farm laws and implement other maximalist demands. Other demands include giving legal status to the minimum support price (MSP), rolling over the proposed reforms in the electricity sector, revoking the Commission of Air Quality in NCR and adjoining areas and reducing diesel price by 50 percent for agricultural activities.

It is not difficult to see that these demands are untenable. Not only are they economically unviable but amount to a complete rollback of economic reforms. In the name of farmers' protest, we are seeing the insistence by one set of private producers, farmers, to force the government to assure them the desired price for their produce and subsidise the production too. Moreover, the route adopted is not limited to democratic protests and campaign but also attempts to impose a street veto on Parliament by road blockades and attacks on private property.

According to ASSOCHAM, the road blockade is costing the economy Rs 3,500 crore every day. It is a massive setback for the economy recovering from the disruption caused by COVID-19. Not only this, the toll revenue loss in Punjab every day is around Rs 3 crore adversely affecting the viability of the road construction and maintenance for years to come.

However, the worst lawlessness was seen in Punjab when protestors started attacking and vandalising telecom towers. According to the latest numbers, some 1500 towers have been damaged by the protestors. Apart from causing economic loss to the telecom companies, it has disrupted the flow of information, education, and business in these regions when more & more economic activities rely on mobile and internet connectivity.

However, the greater cause of worry is that such vandalism is aimed at inflicting costs on private companies. It is the direct result of the years of hatemongering against private enterprise in the country encouraged by politicians and a section of left-wing media. The intense demonising of corporates and glorification of agrarianism threatens to push India back into the dark socialist days of the 60s and the 70s when Indian economic growth tanked with untold miseries suffered by the masses. By its very nature, agrarianism breeds Luddite tendencies that are now on full display in Punjab.

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It is unfortunate as Punjab has already been under severe economic distress for a long time. Its economic growth has been consistently lagging even backward states like Bihar for years. The unsustainable and inefficient agriculture incentivised by the price distortions caused by subsidised electricity, fertilisers, and guaranteed prices & purchase for overproduction under MSP and APMC regime has precipitated a severe ecological crisis. Groundwater is running dry, the cost of production is increasing, and the whole region is becoming India's cancer belt.

What Punjab needs is diversification -- both of its cropping pattern and economic activities. Moreover, for that, it needs to attract more industry and private investment. However, the lawlessness and poor regard for private property coupled with anti-industry sentiment does not make it a particularly conducive place for companies to invest. Brookfield of Canada owns the Jio towers that were mainly targeted. Such vandalism and violence deter Indian companies from investing in Punjab and harm foreign investors' sentiments.

It is the moment for Punjab and India to decide if they want to pursue the path of growth and development or miss the bus once again as they have done so many times over the past decades. It needs to be understood that there is no alternative to industrialisation and that it will be led by the private enterprise and big industry as in all other parts of the world.

Furthermore, the first thing economic growth requires is trust, stability and law and order. If we continue on the path of political opportunism and populism pandering to one set of private producers' unjust demands, we are doomed to be trapped forever in the low-income category. It is indeed a pity that those who spend a fortune over products made by corporates from China, Japan and Europe -- from mobile phones to electronics to cars -- want to destroy Indian corporate entities to soothe their Luddite agrarian delusions.
Abhinav Prakash Singh is assistant professor, Shri Ram College of Commerce, University of Delhi, Delhi. Views are personal.

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