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Kalvakuntla Chandrashekar Rao - KCR
Kalvakuntla Chandrashekar Rao - KCR

Is TRS Chief KCR A Keynesian Economist?

Sam Arackal for Hyderabad Youth Mirror

K. Chandrashekar Rao, popularly known as KCR is on a war footing mission by creating history in do-gooding and adding new chapters in micro and macro economics.

There was a time when KCR was dismissed as a spent force on the way to oblivion. It was the time when YSR ruled the united AP with an iron fist eclipsing all his political rivals like Mr. Chandrababu Naidu and KCR with his populist politics. Now YSR is history, the large political and economic constituency he assiduously nurtured faced uncertainty after his exit from the political scene giving room for YSR Congress led by Y.S. Jaggan Mohan Reddy to cash in on. But skeptics proved wrong with KCR capturing power outsmarting established players like YSR Congress and TDP edging them out from Telangana politicalscape.

Today, KCR is on a mission to make Telangana as No 1 welfare state. Now let us discuss the welfare measures of KCR and its political and economic implications.

Many governments had promoted welfare measures earlier. But few did measures like building 560 sq ft two bed room homes for the poor with a common living area, a kitchen and two toilets; a welfare measure that will have its political and economic ramifications. Now let us check discuss on the same. As rent is going to be the drain in the resources of the poor, pucca houses with water connectivity will enable them to focus on improving the standard of living. This will enable them with expense reduction induced purchasing power that will result in consumption of goods and services. Money saved from rent is money earned. The poor will go for latest automobiles, mobile phones, and other consumer durables.

On the other hand, building class houses will boost the growth of sectors like cement, steel, wood (for furniture), pipes, electric items etc. The macro economy which is facing recession is going to be immensely benefited by housing development. Keynesian Theory of Employment states an increase in aggregate effective demand would increase the level of employment. Effective demand refers to an increase in consumption and investment of an economy. It is this effective demand that is going to boost national income and national output.

Now let us analyse how his housing schemes can bolster the economy. For example the key stakeholders in housing construction sector: the civil engineers, architects, carpenters, electricians, plumbers, masons, will get prolonged employment when Telangana government move on with housing projects for the poor in various parts of Telangana. This will reflect in the movements of goods, services, capital and employment wages as a result bestirred economic activity for allied sectors like food and beverage services, FMCG, fuels etc. On the other hand, the poor who received housing will focus on improving their standard of living by involving in economic activities like vehicle purchase, eating quality food, buying consumer durables, and using other services which will have its bearing on the economy.

Good tidings for the micro as well as macro economy. Now let us discuss its political and economic ramifications. First casualty will be drop in the purchase of flats. The real estate lobby which had been jacking up prices of flats and rents are going to be badly affected as a result of government’s housing schemes. Earlier the trend was addition of houses and flats by the upper middleclass expecting value addition to their property. Now that the poor are going to be benefited by housing schemes a section of the poor will leave their rented residences. As a result there will be higher supply of rental properties and lesser demand.

Already the rents have hit the roof making it difficult for the lower middle to pay more on rents. Sooner than later the lessors will find it difficult to find lessees. This will bring down the rents. Therefore, the writing on the wall is clear – the big flat promoters as well as smaller house owners who lease out their portion will have to down the rents. Reduction in rents will result in added purchasing power of the common people which will lead to ramped up consumption of goods and services. Isn’t it good for the economy?

We saw the economic effects of government’s housing schemes. Now let us consider the political ramifications. The housing projects for the poor will expand the vote base of KCR edging out competitor political parties like YSR Congress, Congress, TDP, and BJP from the Telangana political space. Besides, housing schemes will wean the people from left wing extremism and political irrelevance of left parties. As economy is mortgaged to politics, peaceful political climate will usher in economic growth.

The whole hearted participation of executive is vital for soft smooth functioning of the government. Enough with strikes in sectors like transport, communication that will have its bearing on the economy.

KCR’s decision to give 40 percent hike to government employees is sure to give a fillip to the economy in the form of increased consumption of goods and services especially in the luxury segment.

This is the first time in history of AP that government employees received a huge hike prompting AP chief minister Chandrababu Naidu to follow suit. As happy executives are important for the facilitating projects, executive switch to TRS will further cut to size competitor parties Congress, TDP, BJP, and YSR Congress.

One cannot lead unless one is future oriented. Clinging to this theory, KCR’s set his focus next on developing flyovers in the manner of China. His Chinese visit imparted a clear idea in him on developing multilayer highways in the city. As other areas of infrastructure for investment attraction is already built by former chief minister Chandrababu Naidu, KCR’s flyover project with Chinese investment to build flyovers, skyways, multi-grade separators and sky-scrapers will ease the traffic leading to smooth transport of goods and services in time. Guess what will be the economic implications. Middle class will rally round TRS leaving little room for competitive parties to grow. Congress and TDP will be the worst hit, BJP stymied and YSR have little to capitalize on government failures in the years to come.

“If you give 100 per cent to everything, probably you will enjoy 200 per cent of the benefits”, according to management guru C.K. Prahalad. Taking cue from this, KCR is on a mission to revive the agriculture sector by spending Rs 25,000 per annum on irrigation projects to be completed in two years. He also issued orders to ensure 9 hours uninterrupted power for farmers.

If KCR takes action to protect farmers from seed monopoly by government directly supplying seed to farmers he can emerge as a messiah of the farm community.

Although results are yet to realize, this measures will instill hope in the minds of aggrieved farm community.

India has seen development oriented politicians like Shri Narendra Modi as chief minister of Gujarat and Mr. Chandrababu Naidu as chief minister of AP in promoting development. They indeed brought development to their respective states. But the difference lies in the humane approach pursued by KCR with his inclusive agenda. KCR’s welfare measures for poor to have own houses, farmers with hope of better infrastructure for irrigation and nine hours power supply, coupled with his initiatives in infra segment, the state will beat other growth models in the years to come.

Former General Electric’s chief Jack Welch said, “Number one, cash is king… number two, communicate… number three, buy or bury the competition. Today the political trend is competitive populism. Even in competitive populism there are differentiators like doling out fans, mixer grinders, televisions as practiced by parties like DMK, later AIADMK, Samajwadi Party etc. This hardly impacted the economy other consoling people with a few goodies. Here is a visionary, a statesman who mixes economic sense with populism who believes in the theory, “If you give 100 per cent to everything, probably you will enjoy 200 per cent of the benefits.”

No wonder TRS chief KCR, the chief minister of Telangana is all set to create a macro economic trend which is a growth model in the manner of Keynesian theory of economics awaiting a spillover effect.

He has bought the competition as expressed by former GE chief Jack Welch. KCR can be equated to global diplomats like George C. Marshall who presided over Marshall Plan and revived Europe. The trend KCR sets in Telangana will raise the important issues: doling out a few consumer goods are temporal benefits and drain to exchequer. Secondly, growth should be humane by providing housing facilities for the poor while creating economic opportunities for the rich. That is KCR brand, the Keynesian Economist.

[The author is a senior writer who works with a private company in Hyderabad.]

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