From Business World of 24 May 2005.
Hope
in bad times?
The
celebrations of the UPA government’s
first anniversary were on a low key. It is natural that the opposition should
have been uncomplimentary; but even the government was rather subdued. Just in
case anyone dared look cheerful, the government’s leftist supporters set
everyone a good example of sullenness.
Was all that gloom
necessary? Government is a snail-like animal; everything it does takes time.
Much that it does was begun ages ago by its adversarial predecessor, who takes
credit for what goes right. What it has begun will take years to bear fruit. If
it can begin at all, that is; for its leftist allies cavil at any step the
government may take. They see capitalist plots behind every move, scheming
reactionaries behind every scheme. However well prepared the banquet, they know
how to turn it sour.
Anyway, the past year is
past, and none of what happened matters. What matters is the remaining four
years of the UPA government – assuming its allies stay with it for that long.
It should be asking itself what it can do during this time.
In a sense, the answer is
clear – it is even written in stone, or in the Common Minimum Programme (CMP).
But that is part of the government’s problem. The CMP was drafted in two days
flat by clever amanuenses who knew their job was to paper over the rifts
between the left and the right. It comprised all the good intentions of both
sides. It was more like a Common Maximum Programme; it contains more than the
government can implement in five years. Executability was not in its
draftsmen’s brief; their task was to design a flag under which the motley
armies could march.
Now that the armies have
had a year’s experience of marching out of step, it is time they got some
drill. A model for it is the drill proposed by President Musharraf for progress
in Kashmir. As he says, exclude what India will not accept, then what Pakistan
will not accept, and from the reduced set, choose what the Kashmiris want.
Similarly, exclude what the Congress and the left cannot accept, and from what
remains, choose what the people want.
What is acceptable to
both is schemes to help the poor. The employment guarantee scheme is one of
them; but there are hundreds. After all, the Congress has been in the business
of removing poverty for half a century; and the detritus of its efforts is
strewn all over the central and state budgets.
The Congress and the Left
can easily agree on more such schemes, as well as on spending more on them.
Before they do so, however, they should look back on the experience of the
Congress, the original scourge of poverty: despite its Herculean efforts to
eradicate poverty, it lost elections. Instead of getting renown as the friend
of the poor, it came to be known as the mother of corruption. It was this kiss
of death that wilted the Congress into just another minority party. It lost the
right to point a finger at Jaya and Lalu because Sukh Ram had blazed a path for
them.
The left now bears the
risk of being tarred with the same brush; but much before that happens, it may
dissociate itself with any disrepute the Congress may attract. Fruits that are not shared cause allies to turn
green with envy.
This is not a remote
risk; the parties constituting the UPA will have to face general elections in
four years, and a score state elections before that. The effectiveness of
redistribution programmes is a very live issue which they can neglect only at
their peril.
There is an even worse
possibility – that their attention will be distracted from this core issue by
less important but more pressing crises. Two of them may be on the way.
One is the worsening of th
balance of payments. The booming economy is sucking in imports. As a result,
the trade deficit in April-December doubled from $14 billion in 2003 to $28
billion in 2004. Net invisible earnings increased too, but not nearly enough –
from $19 billion to $21 billion. As a result, the current account swung from a
surplus of $5 billion to a deficit of $7 billion.
It was hardly worrying since capital inflows were a huge
$21 billion. But commercial inflows are highly sensitive to the current
account. The current account worsened by about $15 billion in the financial
year just past. Suppose it continues to worsen at the same rate. Its deficit
will reach $25 billion by this year and $40 billion. At some point, foreign
investors will see red and run; and then, the massive reserves will melt
quickly. That may be just about midway in the tenure of this government.
At that point, the crisis will wake up the
squabbling politicians and bring the left and the pseudo-left together. But it
may be too late then. It would be better if the ruling coalition woke up now.
