The Moving Fingers Writes Garbled CMP mix Warmth of platitude over cold economics

By M.V. Kamath

The Congressled United Progressive Alliance (UPA) has offered the longharassed people of India a Common Minimum Programme (CMP) which, if truly and faithfully implemented should make the country a paradise on earth. Consider this: the UPA government will immediately enact a National Employment Guarantee Act which will provide a legal guarantee—nothing less—for at least 100 days of employment to at least one ablebodied person in every rural, urban poor and lower middle class household. And, in the interim, a massive food for work programme will be started. We are not told exactly how many will benefit and what it would cost the exchequer. On the face of it, this is a fantastic promise; a real pie in the sky. Does anyone remember that Maharashtra had once tried this out with questionable results? Promise is one thing; implementation is another. And in the process of implementation, it is the venal politician, not to speak of the bureaucrat, who will be the true gainer. Was it Rajiv Gandhi who once plaintively remarked that hardly 25 paise out of one rupee promised ever goes to the targetted individual? But the UPA in its generous mood is not to be stopped.

To enhance the welfare and well being of farmers, farm labourers, and workers, the UPA government will ensure that public investment in agricultural research and extension, rural infrastructure and irrigation is stepped up in a significant manner. Immediate steps will be taken to ease the burden of debt and high interest on farm loans. How? By writing off loans? Has everyone forgotten how in the days of Indira Gandhi, a certain minister from Karnataka forced banks to provide farmers loans indiscriminately to the detriment of banking? Who is fooling whom? The UPA promises to raise public spending on health to at least 2 to 3 per cent of the Gross Domestic Product (GDP) over the next five years, with focus on primary health care. A wonderful idea. But where is the money to come from? More and more vexatious taxation?

The CMP says that the UPA will take “all necessary steps to revive industrial growth and put it on a robust footing through a range of policies including deregulation and, where necessary, incentives to boost private investment will be introduced.” Furthermore, said the CMP, “FDI will continue to be encouraged and actively sought”. One would have thought that the stock market would react positively. Did it? When the CMP was announced, it was greeted by a crash of 4.41 per cent and the trend continued showing the total lack of faith in the UPA government and its policies.

One economist noted that the CMP'seconomic message “is a garbled mix of freemarket imperatives and welfare state ideals” and that it “seems to indicate a preference for the warmth of platitude over the cold calculus of economics”. What the expert was trying to convey is that the CMP in trying to be all things to all people is fooling everyone. But then there is the promise that “public sector banks will be given full managerial autonomy”, which is another way of saying that the government will not bring any pressure on public sector banks to give free loans to all and sundry, as happened once. Is that a promise that will be kept? There is scepticism everywhere. Not only did the sensex fall steeply soon after the CMP was announced, but questions are being asked how the government will get the money to implement all the promises made such as “the development and expansion of physical infrastructure like roads, highways, ports, power, railways, water supply, sewage treatment and sanitation”.

The CMP makes even more rash promises. It says: “Public investment in infrastructure will be enhanced, even as the role of the private sector is expanded.” More, it says: “Subsidies will be made explicit and provided through the budget.” But where does private enterprise come in? What faith does it have in government promises? Remember the day after the CMP'srelease, the sensex dropped 223 points, even when the CMP promised that “Indian industry will be given every support to become productive and competitive” to which end “the UPA government will set up a National Manufacturing Competitiveness Council to provide a continuing forum for policy dialogue, to energise and sustain the growth of manufacturing industry like food processing, textiles and garments, engineering, consumer goods, pharmaceuticals, capital goods, leather and IT hardware”.

Even more significantly, the CMP says that “manufacturing in households and by artisans will be given greater technological investment and market support.” If this is done without intermediaries trying to get a piece of the cake, it would be a major development. Just as significant is the promise that workers like weavers, handloom workers, fishermen, toddytappers, leather workers, plantation labour, beedi workers and others will get social security, health insurance and such other benefits. Would they? How?

At least the NDA government through its policy of disinvestment had raised some Rs 31,000 crores over the past five years. The UPA government has scrapped the disinvestment ministry. So how will it raise the money to fulfil its promises? Go back to the World Bank? Go begging to the Western countries? Nothing is clear. It would seem that the UPA government does not want anything to be made clear. After all, it has made glorious promises to make everyone happy, hasn'tit? A bit worrying to many is the CMP promise that the UPA “will set up a new Department of Ex-Servicemen'sWelfare in the Ministry of Defence”.

Pakistan had its own way of doing the same with disastrous results. The trouble is that the UPA makes promises but does not spell out how they will be kept. Even while drawing the CMP, one notes that the Congress has been looking over its shoulder to see how the Leftist parties would react. The CMP, for instance, ‘rejects? the idea of automatic hire and fire. One of the reasons why industry refused to open up in West Bengal was the fact that they were in mortal terror of a Union leader who could—and did—cripple production. Rahul Bajaj, chairman of Bajaj Auto, made a succinct point when commenting on this; he said that he hoped “the government gives enough flexibility to corporates in terms of labour management”. Some hope, that. But the most important promise made by the CMP is to eliminate revenue deficit by 2009—that is, by the end of the term, if, indeed, the UPA lasts that long. It will involve improved tax collection, eliminating unwanted expenditure, etc., reducing government staff and making government cost effective. Should the UPA succeed in carrying out this promise, we will have to raise statues to P. Chidambaram and Dr Manmohan Singh in every nook and corner of the country. They would have then wrought, as no previous government has wrought, the greatest miracle on earth, turning on its head the saying of a former US Ambassador to the effect that India is a “functioning anarchy”.