XiaoMei
2004-05-26 00:34:09 UTC
The recent India election has an important lesson for us all. That
Oppositionists in desperation may make wild and impossible promises just to
get elected. However, once elected, they find themselves lost as to how the
promises can ever be realized. Probably never.
In other words, they lie. Empty promises.
The incumbent Government is often more conservative in their promises, not
because they are less ambitious, but because they are more aware of the
country's economic and social situation and would prefer to make tempered
promises that has a chance to being implemented.
For example, in the last election, Associate Professor Ho Peng Kee observed
that Northern Singapore lacks a full-scale hospital. So in an election
speech he promised Nee Soon residents of their own hospital soon - sure
enough, a hospital is on the way. Such promises by the incumbent Government
are undoubtedly made after very careful consideration and consultation. In
other words, they are not blind election gimmicks but fully realizable
objectives.
A small country like Singapore has to be even more careful, because we have
very little room for the failed experiments that these inexperienced
Oppositionists has lined up for us. We simply cannot afford to start all
over again. We simply don't want to start all over again.
---
Election over, now to fund those promises
ST 26/5/2004
By PRANAY GUPTE
FOR THE STRAITS TIMES
PARPATGANJ (India) - This community is about an hour away from New Delhi by
a six-lane highway. Verdant fields of maize roll away on either side of the
road, and in the fields are tractors driven by healthy peasants. There are
occasional industrial parks along the way, with neat rows of trucks lined up
behind factories. Billboards advertise a vast array of consumer goods.
Parpatganj suddenly shows up beyond a turn - row upon row of well-laid-out
apartment buildings, schools with large yards, streets lined with mangrove
and plane trees, a movie theatre or two, a busy bazaar swarming with buyers.
The township houses bureaucrats, academicians and white-collar workers -
members of India's growing middle class.
This is the India that the new government of Prime Minister Manmohan Singh
wants the world to know more about: an India of well-planned towns,
productive fields and factories, a country of ample availability of
affordable consumer durables - a nation, in other words, that's open to
foreign investment as it seeks to speed up modernisation for its 1.1 billion
people.
Yesterday, Dr Singh's Finance Minister, Dr P. Chidambaram, said that along
with foreign direct investment (FDI), there would be massive government
investment in infrastructure development, agriculture and job generation in
the manufacturing sector so as to accelerate economic development.
There's one problem with all these lofty ambitions, however: No one knows
where the money's going to come from. Foreign investors aren't exactly
rushing to India, notwithstanding the recent elections that saw an orderly
transition of power from the National Democratic Alliance to the
Congress-led United Progressive Alliance.
The question of foreign investment is especially sensitive because it
directly pits India against neighbours such as China, Malaysia, Thailand and
Pakistan. India received some US$3 billion (S$5.2 billion) last year,
compared to US$53 billion for China and US$10 billion for Thailand.
'This is a puny figure, especially in view of what India has to offer,' says
Mr Gurcharan Das, an economist and former CEO of Procter & Gamble India.
'Despite the economic liberalisation of recent years, there's this lingering
image of an India knotted by red tape and bureaucratic controls. The foreign
investor just isn't given the kind of hospitable reception that China
gives.'
Mr Salman Haidar, former foreign secretary of India, added: 'Foreign
investors need to be told in no uncertain terms that they are welcome in
India. They need to be told clearly that our economic reforms will continue.
They need to be told that India is aiming for a 7 per cent to 8 per cent
annual growth rate - and that it's not going to revert to being an
inward-looking economy... Investors need to be told that favourable
conditions remain for their money - skilled labour, generous tax laws, a
good infrastructure, political stability.'
But India hasn't made any special play for FDI. Although several agencies
exist to invite such investment, they are run with the traditional mix of
lethargy and bureaucratic rigidity.
To some degree, Indian officialdom may be lulled by a misleading sense of
comfort because foreign institutional investors (FIIs) have been active in
the equities market here. This year, net equity inflows into India touched
US$3.4 billion, second in Asia only to South Korea, which has received
US$10.7 billion.
In the 12 months since last May, emerging markets in Asia have received
US$45 billion, with South Korea again topping the list with US$24.7 billion.
Taiwan got US$11 billion. India's share has been US$9.7 billion.
Inflows into the equity markets, however, are highly volatile. This month
alone, investors pulled US$3.8 billion out from Asian markets; last week,
after communist allies of the Congress party came down hard against
privatisation of public-sector behemoths, foreign investors pulled out
millions of dollars from the Mumbai Stock Exchange.
Dr Chidambaram and Mr Kamal Nath, the Minister for Commerce and Industry,
are certain to be vexed by the question of where to turn. If the Manmohan
Singh government slows the privatisation drive, that alone would result in a
shortfall of billions of dollars for the treasury.
Since the tax base cannot be enlarged much, one solution would be to
increase tax rates on the wealthy. In next month's budget, it's virtually
certain that new taxes will be applied on entertainment, first-class travel
and luxury hotels.
Yesterday, the Reserve Bank of India even suggested that the formidable
deposits of non-resident Indians (NRIs) be taxed. These deposits amount to
more than US$4 billion annually. The danger is NRIs pulling out their money
and placing it elsewhere.
There's also more than US$118 billion that India has accumulated in
foreign-exchange reserves - but the government has ruled out tapping this
money for domestic expenditures.
It's also difficult to see how the new government is going to raise new
public money to boost agricultural production, especially since the national
deficit is 4.8 per cent of the US$600 billion gross domestic product.
Indian farmers are traditionally exempt from any taxation. Economist
Gurcharan Das has suggested that the government should allow owners of small
and medium-size farms to lease out their land to large agri-businesses that
could exponentially increase production and thus generate taxable revenues.
India has more arable land than China and this country's competitive
advantage in agriculture, says Mr Das, can be enhanced if the government
promotes low-cost programmes such as drip irrigation.
But the very thought of letting big corporations into agriculture is
anathema to the leftist allies of the ruling Congress. And national economic
policy is usually shaped not by common sense or even financial exigencies
but by hardcore politics.
Prime Minister Singh may soon have to start printing rupee notes in his
basement to pay for the promises of his government.
The writer is a veteran commentator on international affairs.
Oppositionists in desperation may make wild and impossible promises just to
get elected. However, once elected, they find themselves lost as to how the
promises can ever be realized. Probably never.
In other words, they lie. Empty promises.
The incumbent Government is often more conservative in their promises, not
because they are less ambitious, but because they are more aware of the
country's economic and social situation and would prefer to make tempered
promises that has a chance to being implemented.
For example, in the last election, Associate Professor Ho Peng Kee observed
that Northern Singapore lacks a full-scale hospital. So in an election
speech he promised Nee Soon residents of their own hospital soon - sure
enough, a hospital is on the way. Such promises by the incumbent Government
are undoubtedly made after very careful consideration and consultation. In
other words, they are not blind election gimmicks but fully realizable
objectives.
A small country like Singapore has to be even more careful, because we have
very little room for the failed experiments that these inexperienced
Oppositionists has lined up for us. We simply cannot afford to start all
over again. We simply don't want to start all over again.
---
Election over, now to fund those promises
ST 26/5/2004
By PRANAY GUPTE
FOR THE STRAITS TIMES
PARPATGANJ (India) - This community is about an hour away from New Delhi by
a six-lane highway. Verdant fields of maize roll away on either side of the
road, and in the fields are tractors driven by healthy peasants. There are
occasional industrial parks along the way, with neat rows of trucks lined up
behind factories. Billboards advertise a vast array of consumer goods.
Parpatganj suddenly shows up beyond a turn - row upon row of well-laid-out
apartment buildings, schools with large yards, streets lined with mangrove
and plane trees, a movie theatre or two, a busy bazaar swarming with buyers.
The township houses bureaucrats, academicians and white-collar workers -
members of India's growing middle class.
This is the India that the new government of Prime Minister Manmohan Singh
wants the world to know more about: an India of well-planned towns,
productive fields and factories, a country of ample availability of
affordable consumer durables - a nation, in other words, that's open to
foreign investment as it seeks to speed up modernisation for its 1.1 billion
people.
Yesterday, Dr Singh's Finance Minister, Dr P. Chidambaram, said that along
with foreign direct investment (FDI), there would be massive government
investment in infrastructure development, agriculture and job generation in
the manufacturing sector so as to accelerate economic development.
There's one problem with all these lofty ambitions, however: No one knows
where the money's going to come from. Foreign investors aren't exactly
rushing to India, notwithstanding the recent elections that saw an orderly
transition of power from the National Democratic Alliance to the
Congress-led United Progressive Alliance.
The question of foreign investment is especially sensitive because it
directly pits India against neighbours such as China, Malaysia, Thailand and
Pakistan. India received some US$3 billion (S$5.2 billion) last year,
compared to US$53 billion for China and US$10 billion for Thailand.
'This is a puny figure, especially in view of what India has to offer,' says
Mr Gurcharan Das, an economist and former CEO of Procter & Gamble India.
'Despite the economic liberalisation of recent years, there's this lingering
image of an India knotted by red tape and bureaucratic controls. The foreign
investor just isn't given the kind of hospitable reception that China
gives.'
Mr Salman Haidar, former foreign secretary of India, added: 'Foreign
investors need to be told in no uncertain terms that they are welcome in
India. They need to be told clearly that our economic reforms will continue.
They need to be told that India is aiming for a 7 per cent to 8 per cent
annual growth rate - and that it's not going to revert to being an
inward-looking economy... Investors need to be told that favourable
conditions remain for their money - skilled labour, generous tax laws, a
good infrastructure, political stability.'
But India hasn't made any special play for FDI. Although several agencies
exist to invite such investment, they are run with the traditional mix of
lethargy and bureaucratic rigidity.
To some degree, Indian officialdom may be lulled by a misleading sense of
comfort because foreign institutional investors (FIIs) have been active in
the equities market here. This year, net equity inflows into India touched
US$3.4 billion, second in Asia only to South Korea, which has received
US$10.7 billion.
In the 12 months since last May, emerging markets in Asia have received
US$45 billion, with South Korea again topping the list with US$24.7 billion.
Taiwan got US$11 billion. India's share has been US$9.7 billion.
Inflows into the equity markets, however, are highly volatile. This month
alone, investors pulled US$3.8 billion out from Asian markets; last week,
after communist allies of the Congress party came down hard against
privatisation of public-sector behemoths, foreign investors pulled out
millions of dollars from the Mumbai Stock Exchange.
Dr Chidambaram and Mr Kamal Nath, the Minister for Commerce and Industry,
are certain to be vexed by the question of where to turn. If the Manmohan
Singh government slows the privatisation drive, that alone would result in a
shortfall of billions of dollars for the treasury.
Since the tax base cannot be enlarged much, one solution would be to
increase tax rates on the wealthy. In next month's budget, it's virtually
certain that new taxes will be applied on entertainment, first-class travel
and luxury hotels.
Yesterday, the Reserve Bank of India even suggested that the formidable
deposits of non-resident Indians (NRIs) be taxed. These deposits amount to
more than US$4 billion annually. The danger is NRIs pulling out their money
and placing it elsewhere.
There's also more than US$118 billion that India has accumulated in
foreign-exchange reserves - but the government has ruled out tapping this
money for domestic expenditures.
It's also difficult to see how the new government is going to raise new
public money to boost agricultural production, especially since the national
deficit is 4.8 per cent of the US$600 billion gross domestic product.
Indian farmers are traditionally exempt from any taxation. Economist
Gurcharan Das has suggested that the government should allow owners of small
and medium-size farms to lease out their land to large agri-businesses that
could exponentially increase production and thus generate taxable revenues.
India has more arable land than China and this country's competitive
advantage in agriculture, says Mr Das, can be enhanced if the government
promotes low-cost programmes such as drip irrigation.
But the very thought of letting big corporations into agriculture is
anathema to the leftist allies of the ruling Congress. And national economic
policy is usually shaped not by common sense or even financial exigencies
but by hardcore politics.
Prime Minister Singh may soon have to start printing rupee notes in his
basement to pay for the promises of his government.
The writer is a veteran commentator on international affairs.