Where are the second-stage reforms?

Where are the second-stage economic reforms?

Having taken in the final interim budget from the UPA, the last it is likely to place in front of the nation for years to come, the moot question remains, where are the second generation economic reforms that were promised almost a decade ago? Why are we still in the doldrums in terms of job creation, poverty alleviation, taxation and labour laws? Where is the great leap forward in infrastructure? When can we hope to see state-of-the-art health and educational facilities? When will the Judiciary be adequate to deliver timely justice? 

Where is the modernisation in our systems and methods? Why is the bureaucracy so slothful and complacent? Why are our municipalities so filthy and overburdened? When is the military going to get the best equipment and facilities? What happens to all our planning when it comes to results? Why are our rivers stinking? Where is the cold chain, the value addition of massive agri-business, the mechanisation, the efficiency?

Why do Rahul Gandhi and Sonia Gandhi sound like actors in the Supriya Sen starrer Aandhi? Why is this country stuck in a Soviet-era time-warp, befuddled by dated Krishi-darshan type Socialist propaganda, surrounded by ugly concrete blocks?

What a contrast this slight interim budget, unable to address any of this, presents to the dynamic Vision 2020 document being produced by the BJP. That targets a blistering 12% per annum in GDP growth. A figure which will allow India to catch up to China by 2020. It is a document that allies itself to the demands of the ‘market’. The ideology, as Narendra Modi keeps saying, is “Development Politics” and not “Vote-Bank Politics”. And he wants 60 months to do what the Congress could not in 60 years!

The entire UPA tenure of two consecutive terms has been spent mismanaging the economy with minute tinkering with the status quo combined with massive corruption. If it were not for the deviation of the PV Narasimha Rao and Atal Bihari Vajpayee years, we might still be paying premiums to secure an Ambassador or a Premier Padmini and petitioning an MP or MLA for nearly every other necessity of life. And yet, the whizzing Audis, BMWs and Mercedes Benzes seem like no more than an overlay, a metaphor for a pseudo-modernity, waiting for the real thing to catch up.

But next to what cannot be undone, current policies have driven our numbers to its lowest point since the early 1980s, or the last years of Mrs Indira Gandhi’s rule. It is perhaps fitting then, that Mrs Sonia Gandhi, an avid understudy and mimic of the erstwhile prime minister, de facto ruler of India throughout the UPA years, should return the country to its abject nadir and decades of failed Socialism.

Finance Minister P Chidambaram looked bone-tired during his last attempt to make the most of a bad job. But the result was still a lacklustre interim budget, hemmed in by the usual Congress contradictions between total inertia and highly defensive micro-management of policy. It is hard to believe that this damp squib of an offering is the UPA’s idea of playing to the gallery and its targeted constituents.

Some captains of industry and custodians of sundry chambers of commerce, constrained by their positions, intoned that it was a ‘balanced’ budget, not particularly ‘populist’, but their sorry expressions, like those who have come to offer condolences, gave away their true feelings.

Others, like JDU ideologue and former Finance Ministry mandarin N P Singh, said it lacked anything to revive ‘animal spirits’, in  an echo of a fond hope whispered on the wind by our helpless and fast fading prime minister Manmohan Singh.

Chidambaram did perform the classic Congress manoeuvre of trying to play to various vote banks, such as minorities and students, with the giveaway mantra, but even these were tame allocations from a constrained and diminished kitty, hamstrung with colossal debt. He made no bold moves, cut no direct taxes whatsoever, despite its proven potential to stimulate and enthuse the moribund economy. Even the subsidies stayed on for the moment.

Many called his attempt to contain the current account and fiscal deficits ‘jugglery’ and ‘unethical’ because he brought forward income not yet earned and pushed away expenditure to the next fiscal for the arithmetic to work. International rating agency Moody, stated that the fiscal situation in India remained ‘worrisome’. It implied that it would have to look at a downgrade if Narendra Modi and the BJP/NDA did not form the next Government.  

But, much as Chidambaram may point at his cossetted deficit number, it is not the only culprit, because the entire economy is on its knees, and needs some bold market-friendly steps urgently. But Congress thinks market-friendliness and being for the aam aadmi are mutually exclusive, instead of being essential partners towards the objective of prosperity for all. This, fortunately, is apparent to the BJP, and it is not afraid to say so.

Chidambaram did try to enthuse some long suffering quarters such as the automotive sector with excise cuts. But both interest rates and inflation are too high and GDP too low for this isolated action to have much impact. He also directed some commendable largesse towards one rank one pension for the Armed Forces.

Economic Times perennial Swaminathan Aiyer wrote, not unsympathetically, that Chidambaram’s numbers and projections are not credible. Communist stalwart Sitaram Yechury said that the lack of public investment has driven the country back to 1991, and worried aloud about what it is doing to our already bleak employment prospects.

The Finance Minister doggedly cited the rise of the GDP from 4.4% to 4.6% and on to possibly 5.2% for the latter two quarters, saying it was not a bad showing in a difficult global environment. He hoped it might lead to even 6% in the next fiscal. But the fact is, India needs double-digit growth in GDP to gradually eliminate abject poverty. Hand-outs, which Congress specialises in still, is an admission that it has failed over six decades, to actually remove poverty.

Perhaps the dynamism and commitment to growth of Narendra Modi, the economic prescriptions of Arthakranti, an RSS influenced economic think-tank, former Commerce Minister and Harvard Economics Professor Subramanian Swamy, and B JP Vision Document 2020 Head and former BJP President Nitin Gadkari, can take this country forward to its zenith. That is, after the elections throw up the expected BJP/NDA led Government.

And it might be an excellent idea to make the bold Mr. Subramanian Swamy the new Finance Minister in order to see the vision into reality, in concert with NaMo and the rest of the Government.      

(1,101 words)

February 18^th, 2014

Gautam Mukherjee