Policy Immobility

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Article Name:  Immobility Policy
A TREND appears to be in the making. The government is increasingly caving in to a wide variety of special interests, from agriculture to industry. It remains to be seen to what extent this will become a defining trend, but thus far the government appears somewhat pusillanimous before a surging groundswell of vested interests. Take as an example the agricultural sector, which is demanding a hike in the procurement price of wheat, the controlled price of sugar, and abolition of the general sales tax on agricultural inputs. Last week, parliament witnessed a furor as the Standing Committee on National Food Security and Research debated a proposal to abolish the GST on agricultural inputs. As the debate unfolded, demands materialized to the effect that the committee should also recommend a hike in the support price of wheat and the controlled price of sugar. The final recommendations to parliament said that GST on agricultural inputs should be withdrawn, but the resultant furor in the National Assembly over the absence of any mention of further escalation in the support prices for wheat and sugar forced the deputy speaker to refer the report back to the committee.

Let us understand two things here. First, the inclusion of agricultural inputs into the GST net was a hard-fought-for measure of the previous government at a time when it was also facing serious political challenges. Second, the price of wheat has fallen by almost 30pc in international markets since April this year; and yet under pressure from the agricultural lobby the government still agreed to a support price hike of Rs100 per bag last month. Now some members of the house are demanding a further increase of Rs200, which makes no sense in the prevailing circumstances. The government has already obliged these interests by agreeing to remove GST from agricultural inputs, effectively rolling back a hard-won reform measure of the previous government, and it now appears to be trying to find a way to oblige them further with price increases as well, whether or not the economics make any sense.

The same story is repeating itself in many other forums. The government was recently bullied by the textile lobby into hurriedly abandoning its winter gas allocation plan, and another demand for zero-rating textile exports from GST is being prepared. The sugar cartel is freely fleecing cane growers, and yet demanding an increase in the controlled price of sugar. One is hard-pressed to find a place where the government is taking a strong stand against a powerful vested interest. Given the ambitious targets being set by the finance minister, who likes to give the impression that he is in charge, it is important that the ship of state be in strong and steady hands. Thus far, it appears the government is too fearful to meet the challenges before it.

 

Typical Words/Vocabulary

Vocabulary From This Article	Type of Word	Meaning
Procurement	Noun
Abolition	Noun	Ending
inclusion	Noun	the action or state of including
Prevailing	Adjective	existing at a particular time
Abandon	Verb	Give up