PA turns hope into despair

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By R. Balashankar

Communists are happy with little crumbs. Tinkering with text-books, restoring the discredited old war horses in history councils, getting few bucks from Arjun Singh for Sahmat and their numerous other NGOs, but when it comes to real economics, they either feign ignorance or look the other way or else express exasperation. The UPA has shed many a crocodile tear for the farmer, poor and the slum dweller. What has the budget done for them? There is nothing in the budget for the BPL families. Both the Communist and the Congress had promised to work and restore the public distribution system. But what the budget has done is to destroy even the foodgrain procurement procedure.

They had said the core sectors will not be opened up for the MNCs. Even the NDA government did not raise the FDI limit either in insurance, telecommunication or aviation. Not that there was no intent in the NDA. Voluminous paperwork was gone into and numerous cabinet notes were prepared. But somehow at some level it got stalled repeatedly. For, there were people in the NDA for whom the country was dearer than global economics.

Chidambaram has got everything in by the back door. His sneaky cleverness is evident. He and his mentor Man Mohan Singh went ahead with airport privatisation even before the comrades had their morning tea in the UPA. Then came the budget. Again no CCEA, no cabinet. It is in the budget. The cap is blown over and the limit is raised from 26 per cent to 49 per cent in insurance and aviation, and 74 per cent in telecom.

The Left is behaving as if FDI is the only issue. The Congress and the Communists were claiming that it was the simmering anger in the rural areas that brought them to power. But there is nothing to ensure that money flows into villages. There is nothing in the budget to revive the public distribution system, to find solution to farmers? suicides in Maharashtra, West Bengal, Punjab, Andhra Pradesh and Karnataka, all UPA states.

Chidambaram has opened floodgates to Bill Gates, delivering a body blow on component suppliers by removing the excise duty on finished computer import. The domestic manufacturer has to suffer. They will lose out to imports. He has widened the de-reservation (85 items) in the small-scale sector so that the MNCs can have a huge party. The textile industry has all concessions, but the small vendor will pay heavy. The sale of farmland has been exempted from tax so that the cultivable land can be bought up by vested interests. Remember, the major problem the WTO has with India is its booming agriculture sector. The budget has adversely affected both the tractor and textile vendor.

With all the so-called reformers Indian agriculture sector was a primary target to disrupt. The NDA, alleged the Communists and the Congress, gave a raw deal to the Indian farmer. So they unleashed their megaphones to describe themselves as farmer-friendly. And what have they done for the farmer? Rs 2,800 crore for irrigation in a country where 65 per cent of agriculture land in over five lakh villages is unirrigated. And a quiet burial of the river-linking plan of NDA. They depend on the rains. There is nothing for improving the storage facility for the farmer or ensuring remunerative prices to his produce. The Bharatiya Kisan Sangh during its pre-budget discussion with the Finance Minister had pleaded for these initiatives. They too were hopeful.

Disturbing the stock market, not increasing the interest rate on EPF, systematically destroying the rupee to benefit the dollar by stopping RBI from intervening in the market (a cheap rupee is the guarantee for increased foreign debt). This, what the UPA government is planning in the name of giving sop to the poor.

?It may have been a packaging masterpiece to create the illusion of a reorientation of government activity, but a careful reading shows that much of it is a rehash of existing programmes, down to the funding of specific public sector entities. Beyond a point no one will be fooled.??T.N. Ninan

While claiming a big bang to social sector, the budget has reduced by 52 per cent (Rs 5,050 crore) from the Sampoorna Gramin Rozgar Yojana, a food for-work scheme of the previous government. In comparison, the actual outlay for other schemes of social sector has seen an increase of just Rs 950 crore. The Left is behaving as if FDI is the only issue. The Congress and the Communists were claiming that it was the simmering anger in the rural areas that brought them to power. But there is nothing to ensure that money flows into villages. There is nothing in the budget to revive the public distribution system, to find solution to farmers? suicides in Maharashtra, West Bengal, Punjab, Andhra Pradesh and Karnataka, all UPA states. ?On Day 2, the picture looks different from what it did on Day 1. There is plenty of promise, but almost no extra money. It may have been a packaging masterpiece to create the illusion of a reorientation of government activity, but a careful reading shows that much of it is a rehash of existing programmes, down to the funding of specific public sector entities. Beyond a point no one will be fooled.? This is how, T.N. Ninan, noted economic writer and Editor of Business Standard described the budget.

While one or two established private airlines will benefit, Chidambaram has ensured that Indian Airlines and Air India will go into red and other fresh private initiatives in aviation will be grounded by the steep tax hike on leased aircraft.

The stock market is spooked by the turnover tax. It could have been a welcome step for regulating unsavory market transactions. But it has further dampened the investor confidence.

It did not take a month for the UPA to turn hope into despair. The NDA government managed its macro economics magnificently well. It was the micro economics that did it in.

For six years Vajpayee was blessed with a good monsoon. Now, a season of drought is staring in the eye. Already, inflation is up from 4.2 in May second week to 6 plus. Industrial production has started falling. The rupee has fallen from a steady high of 44.67 per dollar in May second week to 46 per dollar. Projections of a fall in agricultural production is already out and the government is mulling the idea of declaring drought. Foreign exchange reserve too is falling. And there is no promised ?human face? in sight. Take the case of EPF. The government is not able to give higher returns. Same is the case with interest rates on savings.

It did not take a month for the UPA to turn hope into despair. The NDA government managed its macro economics magnificently well. It was the micro economics that did it in.

The public sector policy has revealed the real face of Chidambaram. He is saying one thing to please the Left and practicing something very different. What Chidambaram has given as government loans to PSUs for 2004-2005, i.e. Rs 2,132.56 crore is obviously less than Rs 2,933.42 crore provided by the NDA in 2003-2004. Even the equity support for National Highway has declined to Rs 1,848 crore from Rs 1,993 crore in the last fiscal. No equity support has been provided in the budget for central PSUs in coal, petroleum and telecommunication services. In the budget speech, the Finance Minister promised to pump in more money into all the core sectors. But in actual allocation the increase was only 9 per cent from what Jaswant Singh had given.

To sum up, Chidambaram has made a fool of the Left. Rhetoric apart, it is a left-handed sit-down and ?shut up? signal to the comrades.