The pandemic pushed the Indian economy to the greatest crisis that it ever had to face, leading to its collapse in the month of April/May 2020. Although the official data computed the fall at 7.7%, the economy has declined by around 29%, estimated Dr Arun Kumar, Malcolm S Adiseshiah Chair Professor, Institute of Social Sciences, New Delhi.
Chairing a panel discussion on the topic, Pandemic & Union Budget 202: Implementation and the way forward, organized by Impact and Policy Research Institute (IMPRI), New Delhi, and Counterview, he argued that the Finance Minister has not taken the correct macroeconomic framework into account and missed a golden chance to shift the economy back onto its tracks. He highlighted the critical challenges of ensuring universal vaccine administration, tackling the new variants of Covid-19 that has emerged, reviving the demand in the economy and bringing an end to the menace of crony capitalism.
Expanding on this growing challenge of cronyism, Dr Kumar listed out a few examples of how crony capitalism could negatively impact several sectors and dismantle the efforts to build back better. He went on to add that the rapid spree of disinvestments that are in the pipeline will flood the asset markets, leading to a drop in the asset prices. This will provide the crony capitalists with cheap assets.
Further, commenting on the increased investments in capital intensive projects, he added that in the allocation of said projects, the crony capitalists may interfere and impair transparent and unbiased allocation. This can lead to the formation of large monopolies in several sectors like telecom etc. Even with regards to the plans of setting up a Development Finance Institution – DFI, he cautioned that cronyism could lead to corruption and bias in the disbursal of funds. Crony capitalism may also dismantle the intentions of setting up Bad banks, he remarked.
Dr Kumar noted that in the garb of promoting the concept of minimum government, maximum Governance, the government is hellbent on its mission to dismantle the public sector. However, the pandemic has shown that the public sector is of critical importance.
Rather than doing away with it completely, the government should focus on making them more efficient and accountable, he suggested. The real problem is the rising crony capitalism that has crept up in the public sector. This needs to be tackled with better implementation of rules and by bringing about a clean-up of politics, he opined.
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Acknowledgements: Nikhil Jacob, based in Goa, is a research intern at IMPRI, New Delhi, and is pursuing post-graduate diploma in Environmental Law and Policy at the National Law University, Delhi
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Acknowledgements: Nikhil Jacob, based in Goa, is a research intern at IMPRI, New Delhi, and is pursuing post-graduate diploma in Environmental Law and Policy at the National Law University, Delhi
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