Sinking Deeper In The Mire

The budget has arrived: more taxes, more spending, more printing of what is called money. We are sinking deeper in the mire.

     Money can be printed in any quantity, but commodities cannot be brought into being in that easy way. They have to be made out of the labour of willing and able men, out of raw materials and out of what is called capital, which is the accumulated savings of previous work reinvested in order to get the raw materials, the tools, and the men to be employed in the work on adequate wages, and to bear all the risks involved in any enterprise. When governments feel the need for money, ministers can either take it from the people by way of taxes, which is unpleasant and at certain points even impossible, or they print IOUs and give it to people calling it money. They say: “He who borrows now from you is not a common merchant or speculator but the great Government under which you live. Our IOU is as good as gold.” Unfortunately the Government under which we live has borrowed not only from its own loyal and confiding people but from people abroad, who will not take the lOUs but want such commodities as they desire to have, which our people can make and send to them to discharge the loans. Our people have to take the Government’s IOUs and work an order to make these things and send them abroad. The lOUs are not as good as gold. The rupee-note does not procure as much food or cloth or kerosene, or labour, as it used to.

     The ordinary borrower, the merchant or the gambler can borrow only as much as the creditor agrees to lend after examining the position of the borrower. His ‘credit’ has limitations. But the Government can print as much of lOUs as it likes and pay those who work for or sell anything to it only in such IOUs. The Government has thus the power of compulsory and unlimited borrowing from you and me. It need not ask us whether it may do it. It plans for expenditure and exercises this power to meet the expenditure. This is ‘deficit financing’.

     This process of taxation and printing of money has been going on for a long time and at such a pitch that the nation is now stuck in a quagmire. Hoping to get out of it, the Congress Government, which is the author of all this disarray, proceeds further forward in the same direction, because it believes there is hard ground ahead. But it is bogged deeper and deeper in the mire instead of getting out of it.

     It is difficult for even a powerfully built elephant to pull itself out of the mire in which it happens to get stuck. Yet that is the plight of the present Finance Minister. One can see his mind which is not in tune with what he is compelled to do. His inability to get out of the policies in which the national economy has got stuck is obvious. We have seen how Kwame Nkrumah has fared. He is now moving from place to place to see where he can find asylum and hide his disgrace. Foreign educated Nkrumah was easily placed at the head of the newly emancipated African Gold Coast Colony. He was called the “Redeemer” of the nation and enjoyed unlimited authority. His ideology and his love of fame and personal power, his aversion to friendship with Western Powers—the usual contrary reflex for benefits got—and his adhesion to what he called socialism, made Nehru fall in love with him. There is no comparison between India and Ghana in size of country or population. But what failed in a much smaller country must fail even more disastrously in a bigger country with a population fifty times larger.

     The new regime in Ghana (after the coup) is expected to concentrate on rebuilding the country which Nkrumah brought close to ruin.

In Accra, announcement of the coup flooded the streets with merrymakers. Jail doors were opened for hundreds of Nkrumah’s opponents who had been imprisoned in recent years. Nkrumah, not renowned for personal courage, is likely to stay away from Ghana for the immediate future.

Nkrumah—in what basically is an agricultural country—launched grandiose “prestige” projects. He spent wildly on unproductive steel mills, palaces, jet planes. As a result, the country sank deeper and deeper into debt.

Meanwhile, in the past four years, the cost of living increased 300 per cent for the average Ghanaian Stores now are almost empty. Taxes have skyrocketed. Among other things, Nkrumah squandered all of Ghana’s foreign exchange account with Britain, amounting to a half billion dollars.

Although he sought help from the West, Nkrumah described himself as a “Marxist Socialist”. He cultivated close links with Peking and Moscow—US News & World Report.

     We in India had a good civil service. But the members of this permanent non-political service were overawed into obedient complicity in error. And even now failure in India is sought to be blamed not on the folly of political bosses where it should go, but on the permanent officials—without whom we might have broken down much earlier. The present budget continues the same policy that has proved to be worse than futile and resulted in intolerable taxation and inflation, between which two the people are squeezed into mental breakdown, and the national economy is in a state of dismal disarray. Though knowing enough to see that the limits of direct taxation have been crossed, and any further advance in that direction would only regress the economy instead of solving any difficulties, yet the elephant moves further down into the quagmire in its vain attempt to escape. On the one hand is a surcharge’ on taxation which is already too heavy and, on the other, additional duties are levied on commodities of common internal purchase and consumption and on goods of export value.

     It is a dismal plight that realizing the harm already done to our economy, the new Finance Minister has obediently to sign a document which will further harm the country; it is a dogmatic, involvement in which he has little power to play any good or useful part. What Mr. H. Venkatasubbiah wrote in his column in the Hindu of March 4 is right and fair:

     If the reaction to the Central budget is almost universally adverse, it is customary to say that the Finance Minister has himself to thank for it, though the constitutional responsibility for a budget is that of the Cabinet as a whole. For the latest budget, however, the responsibility seems to be that of the latter, in more than the strictly constitutional sense. To that extent, Mr. Sachindra Chaudhury is entitled to sympathy, and the budget’s failure to match its objectives and its proposals is a failure of the Government as a whole rather than that of the Finance Minister.

     Hope does not lie in changing the ministers of the Congress Cabinet, but only in dismissing the Congress itself.

     At this point, RSS Chief Guruji Golwalkar’s speech in Madras, as reported in the Indian Express, is relevant and welcome:

     Mr M. S. Golwalkar of the Rashtreeya Swayamsevak Saugh, today favoured free market and a single zone in the country to ease the food crisis. Addressing the annual day celebrations of the RSS here, he said there could be no truth in the theory that merchants would exploit; the people in a free market. He quoted the instance of a place in North India where the Government entered the market to move wheat; to a scarcity area to deny the merchants a 20 per cent margin, the prices rose by 130 per cent. The 20 per cent the merchants demanded included transport charges. (To this must be added also interest on investment money, losses through deterioration, pests, rodents, theft, etc.).

     What Sri Golwalkar has said about grain merchants is a general truth applicable to the entire economy. Until this truth is realized by the electorate and the Congress is dismissed, there can be no salvation.