Tuesday, October 2, 2012

MGR's Mango Man!

Indian economist MGR has written a wonderful piece. It is always interesting to ponder on the following paragraphs:
  • …the aam aadmi is not just the mango man who sells the delicious fruit but someone special that every political party in the country is concerned about and seeks to represent. I had to also mention that, ironically, while all political parties seek to represent him and profess to bleed for him, no one actually cares for him. Although most often he himself does not know that he is the centre of their universe and is a subject of representation, he is too confused to know what he really wants. Perhaps, he would like to be left alone, but every political party knows what is good for him and he has no business to seek anything else.
  • I am yet to find a politician who would want to raise more money from taxes. It is also hard to find a politician who would want to reduce expenditures. While in our private lives we all would like to save huge sums to bequeath wealth to our progeny, we do not care if the government borrows large amounts of money year after year and leaves a huge debt burden to the future generation. We do not realise that today’s borrowing is tomorrow’s taxes. Perhaps, most Indians do not know that every Indian today carries a debt burden of R46,000, which will have to be paid back by way of higher taxes in the next few years.
  • The only way to shore it up is to undertake reforms that will bring in more foreign investment. In addition, in the case of retail trade, lack of competition has led the neighbourhood shopkeeper charging at least what is printed as MRP, which, unfortunately, has no relationship with the cost of production. The only way to minimise exploitation is to increase competition. 
  • There is no alternative for the country but to reform, and reform can be painful. The past sins of controls will catch up to increase the travails of the aam aadmi. We still have a number of prices determined by government fiat and, as and when they are decontrolled, the prices will rise to haunt him. If you don’t allow the markets to determine the prices, you will create more problems. 

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