Is the middle class in Assam in process of subsuming into poor class?

In fact, in making efforts for access to power in Assam in May this year, on finding a flood of commitments given by the political parties to the people of the state, I felt as if my calculation had gone drastically wrong somewhere.

Therein, there were ample commitments for revamping the state’s economy through rapid industrialization, which made me feel that the development of the state’s economy would happen with substantial relief to all sections of the people.

My expectation of rapid industrialization moves, control of price rises and creation of substantial employment opportunities without burdening the already financially suffering people, made me quite optimistic of a meaningful turnaround of the state’s economy.

Among few political parties, by means of commitments to the people to lure them for votes, there was an unannounced competition of declaration of commitments to the people of the state. From attractive financial consideration of freebies to creation of 1,00,000 jobs each year; from revival of sick PSUs to establishment and thereafter rapid growth of new industrial units. Oh! How mouthwatering all those commitments were.

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But frankly speaking, I was surprised at not finding any convincing planning for their viability without pinching a sizeable number of middle class people most ruthlessly. All these commitments were having very great significance because mainly the middle class and the poor class people were finding them believable as they desperately looked forward to some meaningful financial support amidst growing financial crunch.

True, a period of five months cannot be enough to judge any performance, but if I believe that morning shows the day, then what do the government initiatives augur for economic progress of the state, is not believed to be on the right footing. Without any meaningful economic uptrend which is quite manifest in the economy of the state, how the state government is venturing to fulfill its pre-poll commitment of financial relief to the people under the current form and style, is a big “X” for me when I try to correlate government actions with probability of a sustained growth of the state’s economy looking forward to long term impact of such government initiatives and implementations.

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Examining every possible government step for augmenting inflow into the state’s exchequer, I was quite vocal that the middle class should be in readiness to shoulder out drastically increasing more and more financial burdens – because having seen the actions of the government there was no need for any further confirmation that the government seemed not to have any other measure for revenue increase.

It seems the government is relying vastly on increasing burden on the middle class most severely based on the fact that the people of the poor class would enjoy government blessing of freebies inclusive of payment in cash under different schemes, and waiver of micro-finance loans, etc. and resultantly those people would not have to bear that much burden.

The government of Assam by now, should have come out with its proactive plans for giving impetus to increase in private investments in the state. Of course for that, the state economy must enjoy ambitious strategies with increase in purchasing power of the people. The state’s domestic consumption and private investment, both are on low ebbs. In almost all of my published articles on the economy of the state, I have made two points categorically clear.

To bring about economic soundness in the state, while one is meaningful industrialization which will have to lead from the front, the other, being without satisfactory purchasing power of the people together therewith low private investment will paralyze growth of industrialization in state. The extents of growing financial unsoundness of increasing number of people mainly absorbed in the MSMEs can be well understood from the balance sheets of the companies in the state, since most of such business concerns are on oxygen.

Of course, the hardest hit, as I guess, are mainly most of the units in the FMCG sector amongst the MSMEs. With very low productivities in the agriculture sector and increase in the number of people in that sector on one hand and preference of sizeable number of poor people to desist from cultivation consequent on availability of government blessings through freebies including distribution of cash under different schemes and waiver of micro-finance loans etc. how seriously the state government has thought of an economic turnaround instead of being pragmatically serious about revitalization of the industrial sector, is really baffling to me.

The prevailing measures adopted by the government wherein I have not seen anything remarkable to create a very congenial turf for propitious growth of industries in the state, to me, cannot ensure sustained growth of the economy.

Except for offering some freebies including cash under some schemes without performance of any job, the economy of the state, to me, does not have any mentionable achievements. I do not find any reason to believe that freebies are increasing purchasing power of that section of the people leading to any palpably positive change in public consumption and that being one of the reasons, we have noticed aggravation of the supply situation inside the state for the state’s industrial units.

My very strong argument goes in favor of affording an industrial revolution in the state in letter and spirit through proactive actions of the government aiming more at a flourishing MSME sector, presence of industrial giants through their plants in the state also ensuring utilization of cultivable land in most scientific way for most of the periods. I am of the opinion that a sustained growth will be the real justice to the economy of the state in general and the poor class of people in particular.

After all, the real solution is there in most efficient use of the human resources for increasing production and productivity to ensure wellbeing of all concerned.

The fact that the economic progress of Assam, compared to so many states and union territories of India is far behind, is quite admissible. While much debate was done on the jubilation on account of India’s surplus current account position i.e. 0.9% of the GDP in the Q1 FY22 in the balance of payment, the well-founded point to counter that was contraction in pandemic induced import demand resulting in low lying domestic consumption in the country, has brought to light further economic suffering in the country instead. In our GDP formation, contribution of the informal sector is not properly reflected.

The problems in the informal sector are innumerable and a number of units in that sector are malnourished despite the fact that this sector is sought to take the overwhelming burden of industrial employment. We have come to know that Mrs. Nirmala Sitharaman, Finance Minister of India in her last visit to the USA, has appealed to the global investors and the stakeholders to invest in India claiming that the country, with current reset in global supply chain, has ensured opportunities galore for such investors and the stakeholders.

But, what is the prevailing position in Assam? I am quite sure that much impact of tapering domestic consumption and private investment has gained ground in our state, and I am equally sure that such a happening if not properly remedied on top priority basis, will inflict further harm to the majority of the people in the state.

I am constrained to repeat it monotonously once again that I am absolutely in favor of government’s sympathy towards the poor class of people in the state ensuring economic progress of all classes of people. Therefore, at the time when the government takes measures towards economic wellbeing of the poor class of people, it must look at those actions from the standpoint of overall economic effectiveness in the state’s economy also.

Consequent on availability of freebies including distribution of cash, it has been observed that a number of people, who earlier did cultivation, have given up doing cultivation. Has the government not noticed that? What does it augur for the state’s economy? I am absolutely sure, connivance at such mentality is doing further harm to the state’s economy most prominently at the expense of the middle class because such a situation will entail more and more agony to the middle class people – hitting the lower middle class people the hardest. In our search for the reasons of growth of the number of poor people in the society, growth of financial burden stands as one of the most cardinal reasons, growth of unemployment of course, is no way less responsible.

That India slipped to the 101st position from the earlier 94th position in the global hunger index signifies the growing trend of poverty in the country. Is it also not quite certain that periodic demands for upward revision of those government blessings, is another issue that the government must be in readiness to address? If newspaper reports are relied on, gradual increase of grievances for not getting salaries in so many government departments have started occupying spaces in the newspapers very regularly.

In aggravation of the situation, other publications mentioning that already 20 lakh of unemployed youths in the state are in dire straits and 30 thousand MSME units are counting their days for very likely extinction also deserve the government’s rising to the occasion for meaningful solutions. It was the commitment of the government of the same political parties that Advantage Assam was paving the way for investment of Rs.65 thousand crores, but except for repudiating the responsibility on the ground that it was a commitment of the previous government not of the present government, we are not likely to get any other answer now. In view of the actions of the government that I have observed till now, an inclusive growth of the economy on sustained basis, is not in sight. Creation of beneficiaries is now taking the center stage!

True, certain steps that the government has started taking viz., steps for doing away with corruption in land dealing, smuggling activities, and introduction of digital platforms in different government departments, deserve appreciation and I shall not fall short of extending that appreciation. They are really having economic implications favourable to the society. But that can never mean that the other necessities for economic turnaround of the state should be placed on backburner.

I am quite vocal that economic development must be inclusive. Because of that mainly, I have offered my disagreement while I have found so many claiming satisfactory economic progress of the country based on increase in exports and a glimpse in balance of payment position. Without initiating any proactive steps for a favourable turf for all types of industries for their propitious growth, creation of beneficiaries cannot do away with growing trend of the K-shaped recovery which means, there is distinct upsurge in GDP which fails to represent the unorganized sector which I have already mentioned above, thereby showing an increase in exports on one hand and differences of economic disparities amongst the people which are on the rise on the other hand.

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The real position of GDP will be very pathetic if appropriate consideration is made of the outputs in the unorganized sector for the country’s GDP, especially when the country wants that sector to vouch for absorbing the overwhelming majority in the growth of unemployment in the country. Not to speak of failure to cater to the domestic demand for expensive industrial products by manufacturing within the state, ours is a state which is dependent on the other states and union territories even for agricultural items like rice, which is our staple food, and pulses etc.

Observing the government’s failure in coming out with proactive actions for propitious growth of the industries in the MSME sector most prominently, I have come out with my opinion that now the rise in prices is the only way out to fulfill the government promises of freebies inclusive of distribution of money under different schemes, and that burden is likely to accelerate on the middle-class people more severely constraining numbers of them to slip into the category of poor people.

My apprehension has been proved well-founded since now the current levels of taxes on petroleum and diesel have been defended by the Union Minister of Petroleum and Natural Gas, Mr. Hardeep Singh Puri by saying that they fund government initiatives such as free meals and cooking gas and Covid-19 vaccines. Let us look at the areas where the government of Assam has not increased taxes and fees etc. by now. To me no area will be spared – only difference is some will come early and the others will come on their heels!

The environment that the state government has created for running the economy, the effect of which is writ large on the state’s economy, is making me apprehensive of further distress to the state’s economy if no expeditious steps are taken to amend its actions suitably to yield results conducive to the people at large. Though we desire that the unorganized sector should take the lion’s share of absorbing rapidly growing numbers of unemployed youths’ year after year, the plight of the unorganized sector in the state is on the rise rapidly. But is it not that the government’s failure in addressing the demands and growing agonies of that sector a severe blow to the state’s economy?

According to me, the benefits of the government schemes meant for the target sections of the poor class of people cannot be a remedy for a sustained growth of economic well-being of those people and those benefits seem to be with more political end in view than to be for any balanced economic growth. Yes, of course, these are a means for some relief at present, but, failure to do justice to industrialization in the state, cannot hide under that curtain while at the same time, effectiveness of the operation of different schemes for the beneficiaries needs to be reviewed periodically.

The state’s economy is now requiring a fairly competitive broad-based market where acceleration of demand is responded fairly by supply, to thrive. Time therefore, is to strive for improving upon the purchasing power of the people. It is not a healthy sign to do collection of more revenue by passing on the buck in the form of enhancement of rates and taxes etc. to the shoulders of the people which has already made the middle class of people very severely affected constraining them to compromise on different fronts. Together with growing unemployment, it has already resulted in deceleration of domestic consumption, which more in the context of the country, I have already dwelt on in so many of my already published articles.

I would like to call upon the government to do everything pragmatically including assurance of the government ventures to yield for their financial viability, so that improvement of people’s purchasing power takes place and increase in revenue is afforded with more and more sale of goods and services instead of taking resort to increase in rates and taxes etc. neglecting the profile of imperativeness of improvement of people’s purchasing power.

Hence, I am of the opinion that it is absolutely high time for the suffering people of Assam to raise their strong voices against escalation of financial burden. After all I am quite emphatic that the steps the government of Assam is taking to please the poor people without any initiatives for substantial increase in production and productivity, both in the industrial sector as well as the actions aiming at the other sectors like the agriculture sector and the tourism sector which can also contribute enormously without burdening the common man if properly dealt with, are likely to do great harm to the economy of Assam in the days to come.

An economy faces problems from time to time. Assam economy is facing problems in abundance. But, how effectively the government can tackle them, is the most pivotal question for which of course, prowess and a determination to perform are indispensable.

(Author Satyajit Kumar Sharmah Thakur is a Guwahati-based advocate. He can be reached at sksharmahthakur@gmail.com)