Friday, 22 February 2013

Effects of Strike for 2 days, what have the Unions gained

Strike on 20th and 21st February; Bandhs and Strikes, do they serve any purpose

Today is again a working day for many of the office workers after an compulsory 2 days leave due to the Strike called by the 11 different Unions.  After all the hue and cry of inflation, wage rise and a mile long demands list, what have the Unions calling the strike gained.  Two deaths, arson, violence and destruction!  Is this what the unions wanted?  Are these deaths and the destruction going to bring the prices down or increase anybodies wages, I have my serious doubts.


Holding a country to the ransom for someones own agenda and irresponsible demands, is it justified?.  Does this look like the India, we all hope will grow at 8+ rate and overtake US in 2030?  No! frankly this type of behaviour on part of anybody will only take us back to the middle ages and the so called 'Hindu rate of growth'.  

Lets begin with the results of two days of strike.  The list is long and never ending but I will try to as precise as possible.
1. 1 driver killed in Ambala
2. 1 person killed in Noida(though the Police said it was a rumour)
3. A persons ear chopped of in West Bengal
4. Riots in Okhla. 16 DTC buses vandalized
5. Property worth crores destroyed in Okhla
6. Violence and destruction in Patna
7. Sehore, Gwalior, Sagar, Ratlam paralyzed for two days
8. Tempo driver lynched in Thathipur
9. Life crippled in whole of Kerala
10. Life crippled in whole of Odisha

The list goes on and on.  The Unions claim the bandh or strike to be a success.  May I ask them what success?  A back of the hand calculation shows that India lost around Rs.26000.00 crores due to the strike.  Add to this, the loss of innumerable man hours and productivity.  And above every thing else the loss of a human life in Ambala.  Is this called a success?  Do this figures, by any imagination make the strike a success.

India lost around 2 days GDP growth to the strike, the prices are where they were on 19th Feb, 2013.  The minimum wages are where they were.  The banks will start functioning from today and will have to clear the backlog of thousands or lakhs of transactions  that took place on 2 days.  It will take at least a week for them to be fully updated.

In the era of globalization, it would sound prudish to harp about inflation.  When the world itself is going through the vicious cycle of recession, it is absurd for us to demand any hike.  The citizens of Greece are living out on the handouts of the European Union.  They have been receiving aid amounting to billions of dollars in return for austerity measures which include pruning the wage bill of Greece's public sector, reforms in the expenditure.  This has come to Greece, because of its lenient labour laws, which went on increasing the Governments deficit to an undesirable level.  The same is true with Italy, Spain, Portugal and Switzerland.   Only Germany is resilient because it has a very high productivity. 

In France, they have a 35 hours week day for the workers.  This amounts to 7 hours per day for 5 day week.  Take 2 hours of lunch and recreation out of the sum total and you will find that the French actually work for 33 hours per week.  This has an effect on the economy.  Today, many companies like AcelorMittal are shutting shop in France to move to more greener pastures rather than contend with the high wage bill and low productivity.  The French Government is doing what only a Socialist Government could do, raise taxes.  The French government’s 2013 finance bill has announced confiscatory tax rates on incomes and capital gains, and payroll taxes will be increased as well.  If this continues, France will be the latest victim of Eurocrisis.

US has been giving handouts to the economy in the name of Quantitative Easing (QE) since 2008.  In addition to that it is buying back its own bonds at the current market price to ease the financial stress on the economy.  Though the US economy is chugging around, it wont be a surprise if another Lehman Brothers like 'Too big to fail' company declares some kind of bankruptcy.  The Japan is the only country in the world to have a benchmark 0% interest rate regime.  They have been keeping it at 0% since 2010 to keep up the fight against recession.

Why am I explaining all this? Because in a truly globalized world, when Lehman Brothers collapsed in 2008, India and China escaped the brunt of recession due to their own high internal demand.  However the Nifty and Sensex came crashing.  The interest cycle which was very passive till then suddenly became a very dominant monetary tool for RBI with a upwards curve.  The price rise which the unions claim to be of a Governments doing, has been increasing since 2008 crisis.  The Reserve Bank of India which is one of the best guardians of the monetary policy in the world, did not bow to the Governments wishes and continues to hold its way as far as monetary policy is concerned.

If the unions knew a little bit of economics,  our Honourable President, Mr.Pranab Mukherjee, when he was the Finance Minister brought unsurrmountable pressure on RBI to cut the interest rates to the level of Government and markets liking. But Mr.D. Subbarao, the Governor of RBI did not bend under the pressure and continued with the tight fiscal policy, which in a way is helping the Government to counter the inflation today.  After years of rise and stagnation, the December quarter gave the first signs of the inflation easing.  Though way beyond comfort levels of ordinary citizens, it is hoped that it will gradually decrease.

A reader commented on the price hikes undertaken by the Government.  Lets take the diesel hike for example.  The Government pays around Rs.60000.00 towards subsidy for diesel.  To pay this subsidy, it has to earn some money.  To earn money it has to tax people with some kind of cess or surcharge.  The diesel is being consumed by the rich farmers and SUV owners.  The ratio of poor farmer v/s the rich farmer getting the diesel at subsidized rate is very huge.  And we can all see the SUVs being driven on the roads.  The subsidy for these people is being paid by us, honest tax paying citizens.  

Now what would you prefer a tax hike or a price hike which is justifiable given the price of crude oil in the markets.

The Government can do only so much to arrest the price rise.  It is upto us, the citizens of India to give our best productivity and increase the output, so that a meaningful supply is created.  This supply will stem the demand and decrease the prices.  But as far as I know, we don't want to work hard, earn more, we want the best of the world, and for some reasons if we don't get it we blame the Government.  We Indians are only keen on buying 'Gold'.

I will continue with the series, please post your comments, they encourage me.

Vijay Prabhu










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1 comments

  1. I think that was useless and total wastage of time.

    ReplyDelete

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