Financial Daily from THE HINDU group of publications
Monday, Dec 15, 2003
The message from Assembly elections 2003 Give the people what they want
Time to move on from bullock-cart economy, seems to be the message from the recent Assembly elections, in which development was the focal issue. A. M. Faruqui
The rise of BJP in Madhya Pradesh, Chattisgarh and Rajasthan has, above all, demonstrated the organizational ability and the tactical superiority of the parties under the leadership of Mr Atal Bihari Vajpayee. Was it the power of economics over politics that won?
The admirable advocate that he is, Mr Arun Jaitley claimed that the electoral triumph of BJP was such a dominance. It was, in effect, the demonstration of the BSP factor - he meant bijlee, sadak and pani (power, roads and water) over everything else.
The alleged failure of the Congress rulers to deliver on these fronts had meant the failure of its candidates. The Congress representatives tried to answer by exhibiting data regarding progress in these spheres, but the overall impression that one gained from TV discussions was different.
People everywhere complained of poor power availability, bad roads and scarcity of water. The State machinery was naturally blamed. Time alone will tell how true this analysis is. Indeed, the image of at least one of the losers, Mr Digvijay Singh of Madhya Pradesh, was one of an achiever. He was open to new ideas. He came across as a true reformer, a decentraliser and an effective manager.
A trained engineer himself, he was at home with the intricacies of governance as well as with the broad picture of political stresses and strains. I recall a brief encounter with him when I found myself invited along with distinguished experts, like Prof M. S. Swaminathan, and Mr V. Suresh (then of HUDCO) for a brainstorming session. Mr Digvijay Singh's showpiece at the time was his experiment in empowering the local communities to spread primary education. Teachers were locally appointed and supervised by the village community. The State would bear only a part of the salary. This bold initiative won the admiration of many.
Mr Digvijay Singh also took the lead in bringing out a review of the State's human development indicators. He worked out various methods for involving local communities in social programmes, including health. But, all this did not enable him to overcome the infrastructure problems of power and roads.
He tried manfully to enhance power availability, but finances proved a bottleneck. He explained during the TV interviews that the Centre had not been cooperative in releasing assistance under the Centrally-sponsored road programmes. This, of course, was contested by BJP. True, the elections demonstrated that people are quick to deny their support to Governments that do not deliver. But, does that explain the whole phenomenon? The fact that people were not content with the quality and quantity of power supply must have been obvious to most of the workers of the Congress Party no less than that of BJP.
So too, the problems of poor roads and inadequate water supply should have been obvious to all. How is it that Mr Digvijay Singh, the perspicacious leader, did not take prompt corrective action?
There is a message in all this for Governments everywhere. It is not enough to complete the reform process, as advised by the pundits of Delhi and Washington. It is necessary to fulfil the demands of the public at large. What that does to the reform agenda has to be tacked separately.
The implicit policy conclusion that emerges is that given the present environment, the State apparatus has to exert itself to provide the facilities of infrastructure. A reform programme, which for alleged reasons of conforming to ritual fiscal responsibility, inhibits State action to fill the gaps in investment in these areas, is self-stultifying. While I am in agreement with the reformers that fiscal deficit beyond a point is unsustainable, there is no way, however, a State can ignore its responsibility to provide the basic services to the people.
The message that comes out loud from the polling booths of Raipur, Jaipur and Bhopal is that the State will be judged by its success in providing the basic needs of the community. This message applies equally to the party that rules at the Centre as well as the States. True, there is no free lunch.
Users of facilities, such as power and roads, should pay for the provision of the services. But a State that stints on investments for fear that they would be nonviable is failing in its basic task. It is in this context that we have to look at the ensuing budget of the Government of India. It cannot adopt the "soft" option that we have to observe the fiscal norms and so we must dilute our investment programmes on infrastructure.
The emphasis laid by Mr Jaswant Singh in his last Budget must continue in respect of the programme of public investment in infrastructure particularly roads and power. While some economic experts have recently cautioned against rising fiscal deficit, equally eminent other experts have pointed out that the conjuncture of high forex reserves and low inflation gives an opportunity for fiscal stimulation.
Running a fiscal deficit should not per se be considered too high a risk. Above all, public investments of a sufficiently high order, which can be financed through suitable public-private partnerships, can itself stimulate further investment in the private sector. It is a healthy way-out of the current embarrassment of riches the burden of forex reserves with all that it implies for quasi-fiscal costs as a result of their investment in the infrastructure of developed countries by contribution to their gilt-edged and other securities.
True, the Government should not fight shy of levying user charges on the beneficiaries of reform. The development of a national consensus on the politics of such policies is an imperative need.
It is rather peculiar that persons belonging to the Congress Party the initiator of economic reforms find themselves opposing the essential reforms in this direction when the Andhra Pradesh Chief Minister, Mr N. Chandrababu Naidu, undertook reforms in the power sector. A clear evolution of an inter-party consensus on these national issues alone will enable the country to move forward on its growth path, to achieve the ambitious goals set by the Prime Minister for the Tenth Plan.
The polls have conveyed their clear message that governments have to govern and deliver what they are designed to do. There is no safety valve for governments that plead that such policies involve a bitter agenda of resource mobilisation. The electorate is, of course, interested in a soft option if it can get a free lunch, it will prefer it. The duty that is cast on the political leadership of this country is to explain the rationale of the sweet and sour agenda of economic policies that are necessary if the people are to be given the bijlee, sadak and pani that they crave for. The budget of Mr Jaswant Singh will be judged not by its giveaways, but by what it evolves as a policy frame for enabling higher investments and their being made viable.
Truth to tell, this is a challenging task. Good intentions are not enough. Cutting subsidies and establishment costs is a necessary, albeit harsh task. Politicians of all hues, who combine to oppose the few Chief Ministers who embark on such policies, deserve to be isolated.
Populist propaganda is easy, but dangerous. There is need for mass awareness that growth-oriented economic policies demand tough policies to implement them. One cannot have the pleasure without the pain. A budget that promises the moon, but not the wherewithals to reach it is self-condemned.
Mr Jaswant Singh is an experienced politician and intellectual, who can be expected to do the balancing act, which will deliver economic growth and stability.
Above all, he should not ignore the need for stemming the growth of unemployment, which is at the bottom of many of our social and political tensions. This needs a review of policies towards encouraging rural investment in irrigation, roads, storage and marketing, which alone can make our agriculture flourish once again.
It is essential that Government reverse the tendency to sideline the real needs of the farmers. The budget will be a winner only if it straighten out the stagnant trend on agriculture. There is no doubt that the present combination of abundant liquidity in the financial sector and forex reserves affords an opportunity for Government to initiate a radical upgradation programme for India's agricultural sector. The technological triumphs of the Green Revolution of the 1960s are by now part of history. It is necessary to harness the talents of our farmers and farm scientists to involve them in a new Green Revolution that raises agricultural productivity to a new and higher platform.
Let us hope that the 2003-04 Budget will draw the right lessons from the State polls of 2003 in respect of higher investment, policies to abridge the growth of unemployment and a new strategy to revise the Indian rural sector.
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