The Hindu Business Line : Ambitious agenda

AS AN EXPRESSION of strategic vision for the nation, the Common Minimum Programme of the ruling alliance at the Centre can hardly be faulted. After all, there can be no two opinions on the need to step up significantly investments in agricultural infrastructure or improve credit flows for small and medium enterprises, to name just two elements in the United Progressive Alliance's agenda. But there must surely be some doubts about how realistic these goals are, given the general political and economic environment in the country.

The document has set ambitiously higher outlays on various sectors of administration but there is no indication of how the resources are going to be raised to finance them. Take the commitment to raise public spending on education to 6 per cent of GDP. At the present level of public outlay, this should translate into additional expenditure of about Rs 75,000 crore — the combined States and Central outlay at Rs 80,000 crore is only around 3 per cent of the nominal value of GDP. The CMP also talks of increased outlay on public health which should add Rs 30,000-50,000 crore to the bill, depending on whether the Government wants to peg the expenditure at 2 or 3 per cent of GDP (the range indicated in the CMP). There is also a talk of raising outlays in agricultural infrastructure though no tangible numbers are mentioned. Throw in also the reference to a general commitment to enhancing investments across all aspects of infrastructure such as roads, railways, ports, etc., and it is safe to say that the promised jump in public expenditure could rival what the Government is now spending from within its existing tax base and borrowings. Apart from a reference to imposing a `cess' on all Central taxes to fund the outlay on education there is no indication of how all this is going to be funded. Incidentally, any `cess' that is going to raise large sums of money to pay for any particular purpose creates its own complications. Since a `cess' by its very nature cannot form part of the divisible pool of resources between Centre and the States, any allocation out of this to a State or, as a corollary, its denial for some other — if, for instance, not ruled by an alliance partner — is bound to exacerbate the Centre-State tensions.

Even if the Government manages to overcome the fiscal challenge, another confronts it, this time on the policy front. How, for instance, is it going to reconcile the objective of a general lowering of interest rates for government borrowings with the need to keep interest rates high on household savings? Yet another instance of a lack of awareness of ground realities can also be had in the somewhat pious declaration about it rejecting firmly the idea of `hire-and-fire' in labour relations. The fact of the matter is that the dynamics of employer-employee relations have changed decisively to the detriment of the latter. The mandays lost due to lockouts are currently ten times as much as that from strikes. Given the many imponderables in the implementation of these proposals, the public would rather go by the performance on the ground rather than intentions, however well meaning they may be.

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