In India, politics and economics are interlinked. Apparent welfare measures and freebies are the
sensitive vote catchers as well as the biggest sources of frauds at the ground level. Though the practice of Direct
Benefit Transfer (DBT) has considerably reduced the malpractices at the delivery level, economic misuse for
political gain is still prevalent, as it is hard to do away with the so-called socialist legacy. Almost every political debate takes place on the government’s policy measures without subjecting them to a wise analysis. Even deemed wise men talk unwisely.
Based on the media judgement, many times government used to roll back policy decisions and budget proposals. But that was the first time, the Union Finance Minister had reversed the rate cut announcement within a time between dawn and dusk. “Orders issued by oversight shall be withdrawn,” she tweeted within hours of the rate-cut order. That was an obvious case of a hurried bureaucratic decision, for which the authority of the order had reasons.
Experts have different versions of arguments, both convincing and unconvincing. Speaking politically, one could reasonably argue that the high volatile West Bengal election was the factor behind the so sudden rate-cut roll-back. Economically, there was a reason to argue that the cut couldn’t be a foul after all government set a five-year inflation target between two and six per cent. An earnest “babu” concerned about the deficit, which contributes to inflation, either thinking apolitically or shrewdly, thought of making the small savings cheaper for the government. Nevertheless, the unkindest cut of 110 basis points could have spoiled the Bengal ballot prospects for the Bharatiya Janata Party (BJP) since the second phase of the polls. The Finance Minister fire-fought to save the voting pool, especially the pool of women savers in West Bengal, the biggest base of small savings. Still BJP did not achieve what it anticipated.
The cry was louder. The rabble-rousers got a penalty shoot. But was the issue so serious? The rate cut was, no doubt, a prick for the small savers, but not for excruciating pain. Ultimately, at an individual level, the loss wouldn’t have been
significant because the saving is inherently small. Small savers park their money in prominent small savings schemes like post office savings and PPF, not for any big gain or not based on its rate attraction.
They do it to keep their money safer for future necessities, though in any way the return from the scheme is not well above the inflation-adjusted rate. It is the game of safety versus return. If the return is the only aim small savers should be shown an alternate avenue where the return is higher. Small savings cannot be a mechanism for a big return, but safer and economically reasonable in line with what the scheme makes out of the savers’ money.
K V UDAYKUMAR
