January , 2019
Blazing Europe sounding warning bells for India
13:21 pm

Rajiv Khosla

The cold months of November and December are usually associated with festivities, skiing competitions, ice sculptures, and carnival parades in Europe. However, this unusual winter is experiencing a slew of fiery protests in the continent. Demonstrators are on the streets, rallying against controversial policies of the ruling governments in different European countries. Albania, France, and Hungary are in the centre of the cauldron.

In Albania, students are protesting against high tuition fees which range between €160 and €2560 annually against the average income of €350 per month. The Albanian protests are also targeted against widespread poverty and spiraling petrol and diesel prices. Protesters in France popularly known as the ‘yellow vests’ (a law was enacted in 2008 in France that required French motorists to wear fluorescent vests while riding to enhance visibility) are holding demonstrations against rising fuel prices, low wages, miserable pensions and for introducing new taxes on the wealthy. Adding to this, French policemen have been protesting against a proposed €62 million cut in the national police budget. Hungary is also witnessing violent rallies wherein the participants are showing discontentment against the ‘slave law’ which allows employers to ask for up to 400 hours of overtime work in a year. Demonstrators are also criticising Prime Minister Orban’s government for establishing new administrative courts which will oversee public administration cases such as public procurement or election procedures and exercise political influence over the judicial system.

Although the protests have taken place at different time periods and at different locations, there is a lot in common. These protests are collectively focused on drawing the attention of the respective national governments towards the interests of the least well off instead of protecting the interests of the wealthy. These European protestors believe that the present working conditions in Europe resemble the conditions that existed in the 19th century when workers had to work under precarious conditions with low wages and without any social security whereas the employers received the full patronage of the then monarchs. The plight of the ruling governments in Europe also needs to be highlighted as they have to comply with the instructions of the European Commission for controlling fiscal deficit. Italy is a glaring example. Taking populist measures, the Italian government proposed pension reforms under ‘100 quota’ scheme where a worker after serving for 38 years could retire between 62 and 65 years of age. Retirees under the scheme would stand eligible for the full pension benefits and advancement of the retirement age would pave way for more employment. The government also proposed to pay €780 per month to the least well off besides collecting tax on gambling and imposing 15% flat tax on the self-employed with an annual turnover of €65000 or more. Thus, the projected figures overshot the previous government’s estimates by 1.6% (reaching 2.4%) of GDP and the Italian government could not muster the concurrence of the European Commission. A consensus was ultimately reached when the Italian government agreed to walk back to the deficit of 2.04% by delaying the introduction of new social security programmes and scaled back the other initiatives. Ideally, the Italian government in this case, could have taxed the rich more and thereby compensated the poor without disturbing the fiscal health. But from past experiences, it is clear that the investors’ lobby succeeds in saving the imposition of high taxes. Hence, governments worldwide try to keep the fiscal deficit in limits by decreasing public expenditure. Occasionally, stop gap arrangements are made during elections or crisis situations where sops are offered to the least well-off sections. Thus, prolonged test of patience of the poor has eventually culminated into protests and demonstrations as is being observed in case of Europe.

This situation also unfolds a lesson for the Indian economy as well. As of now, the central government has been working on lowering the fiscal deficit in line with the Fiscal Responsibility and Budget Management which recommends bringing down the fiscal deficit to 2.5% of the GDP by 2022-23. As per a Forbes report, the Modi government has succeeded in creating congenial conditions for big businesses in India but it has failed to touch the masses at large. The common man is still facing widespread unemployment, poverty, poor health and chronic income inequality. However, there is nothing sacrosanct about fiscal deficit which makes it inviolable to help the poor and avoid catastrophic situations. Before the demographic dividend in India turns into a demographic disaster, the government should take a lesson from developed European countries and take necessary measures for making the development process more inclusive.

—Dr. Rajiv Khosla is Associate Professor at Institute of Management, C/o DAV College, Sector 10, Chandigarh.

[The views expressed by the author in this article are his own.]

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