By Rajendra Prabhu
We must believe the words of Shri Chidam-baram. Please read this sentence: ? Would the Congress Party have done anything different if it was in the position of the BJP and heading a coalition on the eve of parliamentary elections? I doubt it, because the Congress Party is as much driven by the urban and middle classes as the BJP is.? (Indian Express, January 11, 2004).
If you think this was written by Sitaram Yechury of CPM or A.V. Bardhan of CPI, you are wrong. This was written by a person called P. Chidambaram. I suppose it is the same person who presented us the budget on July 8 as the Finance Minister of the Congress-led coalition government. So it would be wrong to accuse him of lifting many a scheme from the last (interim) budget that the BJP presented, dusting it well, doing some cosmetic changes and presenting it as the proposals of the Congress-led coalition. For, he himself said that the Congress would not have presented a different budget.
Let us take a few of these proposals. Proposal number one: Chidambaram exempts all those whose income is upto Rs one lakh from income-tax.
Reminding Chidambaram of his own words
Proposal of the BJP-led government in 2004 January: ?Employees with a salary income of upto Rs 1.5 lakh where the entire tax is deducted at source, will not have to file their tax returns.? Chidambaram says if you have an income of Rs one lakh, you still file a tax return but don'tmake any payment. Jaswant Singh said you pay tax but don'tfile returns. So you decide which is great: BJP'sor Congress?s.
Proposal number two: When Jaswant Singh proposed Rs 50,000 crore Agriculture Infrastructure and Credit Fund, and a Rs 10,000 crore small-and medium-industry fund, Chidambaram wrote: ?These are what they are: announcements. Mr Jaswant Singh knows that the funds cannot be set up in four weeks as promised, and even if set up, may not be operationalised for months or years.?
Now that Chidambaram has made a series of announcements of similar nature on agricultural credit (doubling in three years, etc.), should not Jaswant Singh turn round and ask his successor: ?Are you setting it up tomorrow morning??
What did Chidambaram really say in his budget speech: ?It is my intention to double the flow of agricultural credit in three years. We have made a beginning by announcing a comprehensive policy on agricultural credit on June 18, 2004. The policy has been received well and will be fine-tuned, if necessary.? (emphasis mine).
So, Shri Finance Minister, yours is also an INTENTION, exactly what you said about your predecessor'sagro credit fund. May God bless you with success. However, some disturbing questions remain:
How do you INTEND to implement it? You say in your speech?through the public and private sector banks, through the RRBs and through the co-operative banks. You PROPOSE to make each sponsor bank ?squarely accountable? for the performance of RRBs under its control, etc. As for co-operative banks you admit ?the situation is grave. In order to find a durable solution I propose to appoint a task force to examine the reforms required in the co-operative banking system, including the appropriate regulatory regime.? This report is to be received by October 31, 2004.
So your promise of ?doubling the credit in three years? is also a lot of INTENTION, PROPOSAL, HOPE, etc. And you INTEND to achieve this credit line through a system, one of whose three links is in a GRAVE situation according to you, which you expect to repair when you receive a report from a task force, which you PROPOSE to appoint. You yourself said that there is a huge gap between intention and realisation?you said that in relation to Jaswant Singh'sproposal. Has the quality of governance in India changed overnight between January 6 and June 18 to make us believe that you will leap from proposal to performance in time for the kharif season which is already on? Any rational person will wonder!
As for the ?doubling credit in three years?, this is the bureaucratic style they teach every minister once he gets on to the chair. In the Administrative Staff College they study the BBC series ?Yes Minister? very closely and before the minister takes office, they have volumes and volumes ready for his rhetoric on Proposals, Intentions, Task Force, etc. That is why you had serious doubts about Jaswant Singh'sproposals, intentions and credit funds. Chidambaram should pardon his critics if they hoist him with his own petard.
One more point. ?Doubling credit in three years? has happened earlier also. Want proof? See Economic Survey the new Finance Minister himself presented on June 7, 2004. Page 159 of the survey says about institutional credit for agriculture: it almost doubled between 1998-99 (Rs 36,860 crores) and 2002-03 (Rs 70, 810 crores). The same report on the same page also says, ?A substantial jump in the credit flow is envisaged in the Tenth Plan (2002-07) which is projected at Rs 7,36,570 crores, almost three times the Ninth Plan achievement.? As the Tenth Plan was prepared by Jaswant Singh'sgovernment, and you have had not time to revise it in the less than two months you were in power, whom should we believe, Shri Chidambaram? The member from Sivaganga or Jaswant Singh?
Interestingly, many other schemes in the budget seem to have the flavour of Jaswant Singh'searlier proposals. The National Health Insurance Scheme, for instance, is just a restructuring of the same scheme that the previous government proposed in the 2003 budget. Only the premia have been reduced and the subsidy from government increased for BPL families. The Kisan Credit Card at least could be attributed wholly to the previous government. Shri Chidambaram'sEconomic Survey admits that by March 2004, four crore Kisan Credit Cards were issued and cumulative credit of Rs 97,710 crores were disbursed as credit.
Irrigation: Between 1996-97 and 2003-04, Central Government provided Rs 14,670 crores for Accelerated Irrigation Benefits Programme. That works out to an average of Rs 2,000 crores approximately every year. So if Shri Chidambaram allots Rs 2,800 crores for it this year, that is nothing to crow about. But the Finance Minister is promising that he would revamp the project and work it faster and faster (shifting the goal as he puts it). That is wonderful. Except that the Survey already says that the scheme was first revamped in 2002 creating a fast track and then again in April 2004 changing the financing part to help the states further!
One can go on like this. What is more significant is that this Finance Minister has shown courage to admit that economic reforms are needed and that he would stick by them. More FDI in critical sectors like telecom, civil aviation and insurance?this is a real red rag to the Red bulls and they are already jumping. Since the government of Shri Chidambaram is riding piggyback on the Reds, what happens when the Red bull turns angry? Will government fall or the Finance Minister eat the humble pie?
Do we need education cess for giving universal compulsory education? Education programmes are implemented by state governments and Congress had 15 state governments till recently. Yet the story is the same?absentee teachers, badly equipped classrooms. Schools under the tent are right here in Delhi. And while there are vacancies for over 8,000 teachers in Delhi alone, even in many government schools in the National Capital, there are no teachers in the classrooms, though on the attendance register they are marked as present.
Every year Rs 40,000 crore are lost in the power sector alone as T&D losses (actually theft). The NDA government with the support of the Congress (which was crucial at that time) passed the Electricity Act 2003 to change the equation in the power sector. But now the Congress is committed to review the Act and Shri Chidambaram'sbudget does not say what he is going to do to stop the T&D loss and implement the Act to save the power sector. He refers only to generation of power and the possible conclusion of loans for 10 power projects. But the core of the power sector is the 50 per cent loss of generated power. He is silent on Electricity Act. Is it because he does not want to alienate further the Reds who are already at his throat for his vote for economic reforms, for more FDI in insurance sector and for retaining low interest regime that the NDA implemented before him, and rejecting their insistence on EPF interest at 9.5 per cent, if not 12 per cent?the same as Jaswant Singh also did?
The irony of our politics: the man who warned that if the two major parties (Congress and the BJP) do not debate the virtues of economic reform in the elections, ?the choice before the people will be between Tweedledum and Tweedledee? is now the Finance Minister of the Congress-led coalition government. Both he and his predecessor are strong proponents of economic reform, of market forces to determine economic affairs and of improving government delivery systems. In some parts the budget speech of one reads like the continuation of the budget speech of the other. Is there a difference more than what Tweedledum and Tweedledee denote?