The UPA government is perhaps taking the advice of economist John Maynard Keynes a tad too seriously. To get the economy out of the depths of a Great Depression, Keynes had advocated greater State intervention — public works to dig holes and fill them up to generate more jobs and that sort of thing. Now with the global economy hovering on the brink of a deep slump, our government has just the perfect excuse to invoke Keynes to start meddling in the economy to suit its own agenda.
A nervous India Inc looks up to the government for deliverance and gets loaded policy prescriptions. So to beat the sharp drop in tourist inflows, hotels have been asked to reduce tariffs by 10-15 per cent. To tackle double-digit inflation, steel and cement producers have been ‘advised’ to hold the line on prices. Private airline operators, who had the ‘temerity’ to lay off 1,900 of their staff, were ordered to take them back. State-owned banks have also been ordered to lower lending rates for businesses.
Did Keynes really advise the government to run amok? After all, India Inc is only doing what sensible managements would do when they run out of cash: rationalise business operations and costs. If their businesses went under, many more workers than those sacked would be left jobless. Asking India Inc to not lay off workers is not State intervention, it’s protecting the government’s electoral turf. And, how can banks lower rates when there isn’t enough liquidity?