Sunday, February 28, 2010

Budgeting for polls, not India's future (February 28, 2010)

Swapan Dasgupta
As befitting a society that loves rituals, there is an eerie predictability about the entire Budget exercise starting with the lobbying and speculation that precede it and the reactions which follow the Finance Minister’s speech. The ritualism has now even extended to the mandatory but anodyne quotations from the writings of great men — this year it was Mahatma Gandhi and Kautilya, earlier it was Thiruvalluvar and even earlier it was Urdu couplets.

This year’s ritualism followed the path of familiarity. Industry honchos writing in the pink papers were predictably supportive of Pranab Mukherjee — it doesn’t do to be critical of FMs — and focussed mainly on his bid to bring down the fiscal deficit. The FDI-wallahs were less inhibited and stressed the absence of allowances for foreign investment in retail and insurance. The clueless politicians in both the Treasury and Opposition benches proffered their familiar responses. To them, the Budget was either “people-friendly” (these days aam admi has become the catch phrase) and “growth oriented” or “anti-people” and “inflationary”. The Left, as is to be expected, may even prefix or suffix their response with some reference to “neo-liberal” policies. Earlier they used to call it “World Bank-dictated”.

The only new addition to the Budget ritualism this year was the Opposition’s walkout. To me this was unfortunate because there was nothing unprecedented about a rise in petrol and diesel prices — it has happened umpteen times in the past, including when the NDA was in power, and will no doubt continue to happen. The Budget has sanctity in a parliamentary democracy and it doesn’t do to stage a walkout. On this occasion there was certainly no extreme provocation and the imperatives of protest could have just as easily been met by angry denunciations in a post-Budget Press conference or rallies. Walkouts and rushing into the well of the House must not become features of a new ritualism.

Our Budgets have become exercises in balancing the aspirations of those who live for the present and those who look to the future. Pranabbabu is an experienced politician who is acutely aware when and how much to concede to the present and how much to invest in the future. But, like the Prime Minister, he is not a free agent. His Budget pronouncements are circumscribed by other political factors: The pulls and pressures of a coalition, the expectations of backbench MPs in the Congress and the jholawallah instincts of the UPA chairperson. All of these amount to the same set of demands: More freebies, more public sector and Government schemes, no taxes for agriculturists and punitive taxes on the better-off and on the entire private sector. Anything else is said to be “anti-people”.

Pranabbabu had to confront another challenge this year. He had to begin undoing the cumulative effects of his previous pre-election Budget and the UPA-1 Government’s five-year profligacy. These paid handsome returns for the Congress in last year’s general election but they have cost the country dearly. Those who protest against the Government-induced rise in petrol prices — and there is no question that this hike will add to the inflationary spiral — must start asking some fundamental questions. Is the Rs 40,000 crore set aside for NREGA worth the expense? Can the money be more productively utilised to create tangible assets for people in the poor districts of India? Was the waiver of Rs 71,000 crore of farm loans a good precedent to set? Why hasn’t the Finance Minister stopped his Cabinet colleague from West Bengal from turning the railways into a parallel administration for India?

Let me pose another fundamental issue. The Finance Minister has rightly maintained that India needs to double its food production in the next decade if it isn’t to confront the shortages of the 1960s and 1970s. This is a pressing challenge for India. However, he has set aside a paltry
Rs 400 crore for the preparations for a second Green Revolution that will be centred on the rice bowl of eastern and central India. He has certainly identified the problem, but is the allocation in the Budget commensurate with the magnitude of the challenge?

There is a crisis of governance and a crisis of politics. Almost everyone of any consequence now admits what has been apparent for the past three decades: India lacks the delivery systems to ensure the optimum utilisation of every rupee of the taxpayers’ money. Yet, despite this awareness, it is impossible to convince the political class that Government expenditure has to be controlled and efficiently used.

Apart from Narendra Modi in Gujarat who sincerely believes that he is the people’s custodian of the State treasury and must, therefore, make efficient utilisation of State resources, there are few in the political class who care for the future. They are rooted to the present and have, at best, an election-to-election perspective. What is particularly unfortunate is that this perspective has now seeped into the popular consciousness making it virtually impossible to reconcile good politics with sensible economics.

In 1991, it was a major balance-of-payments crisis that prompted PV Narasimha Rao to turn his back on socialism — a full 13 years after China abandoned its version of voodoo economics. The fear that Indian debt will be regarded as junk in the international market prompted the FM to begin rolling back the rising tide of deficit — and there’s no guarantee that midway through the fiscal year a political crisis won’t propel a reversal of fiscal prudence. To what depths must India sink before politicians are compelled to realise that the nation’s collective future means more the immediate gratification of the short-sighted? That is an answer only the voters can provide.

Sunday Pioneer, February 28, 2010

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