The Hindu Business Line : Economics, left behind

AFTER MEDIA DEBATES on who actually runs the Government (Mrs Sonia Gandhi or Dr Manmohan Singh) and whether the United Progressive Alliance regime deserves six on ten for its first year, the embarrassing truth is that it all depends on what the `associates' will let the government do. The official position, for instance, is that subsidies, in general, must be curbed and gradually reduced. That free power distribution to the supposedly weaker sections has been a disaster is the known analysis. Leakages and distortions in the subsidy route of dispensing welfare are widely acknowledged. However, can the Prime Minister do anything about it? He is being advised by his allies in the Left to "proceed with extreme caution" which, to many, is only a euphemistic way of saying, "Don't do it!" One of them agreed in principle with the PM but wanted to delay the withdrawal of free power already granted. So what was the recommendation all about then — those getting free power are somehow more deserving than those similarly placed or, worse, the section that can ill afford to pay even more than those currently enjoying free power but must nevertheless continue to pay for what it consumes?

Was the whole debate only meant to be a philosophical enquiry into the nature and causes of subsidies and not a roadmap for action on a matter of crucial economic significance? Thus, the `subsidy' debate at the senior levels of the Government has been reduced to a tap dancing routine of two steps sideways and three steps back. Fuel price hike is another. Everyone says the economy cannot stand the drain of the gap between cost of diesel and petrol and the price realised; simple economics, regardless of how much you twist the argument about what actually is the cost to the country. Yet, the only decision taken repeatedly with certainty is to defer action. One minister thanks the Left for constructive guidance and soothes their egos; meanwhile another acknowledges his helplessness to go forward with fuel price increases as there is no consensus yet. But where the Government thinks it can push ahead with its brand of liberal economics without ruffling the Left's sensibilities it is keen to give it a shot. It believes, for instance, the policy of further opening up of the investment regime to foreign capital can be sustained by merely camouflaging it to appear as something else. Ditto with the policy of dilution of government stake in profitable public sector undertakings. It is being pushed through in the belief that the opposition to `privatisation' of profitable PSUs means the decisive dilution of the government holding to below 51 per cent but not to the process of selling the stake itself. And the list goes on.

When it comes to crossing a river, there are no half measures — you either cross or do not. Of course, you will take whatever precaution is needed, but cross you must, if you really want to. With the present Government the intentions are never quite evident. A decisive and forward-looking government, which this one wants to be, does not have the luxury of subterfuge or obfuscation. The present course is certain to be defeated by economic laws and the limits of people's patience.

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