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Pre-Budget Bargains

The contrast cannot escape anybody's notice: two different responses by Gowda-Chidambaram team to two different sets of pre-budget demands, one from CPI-CPI(M) and the other from the chambers of industry. While the meek protests from the former evokes no response, not even a rebuttal, the clamour from the latter meets with an immediate reaction and bountiful promises including a New Year gift package to be followed by yet another in the pipeline.

By posing the question whether Gowda is going to radicalise the economic agenda or continue the disastrous polices of the earlier Congress government, for the first time CPI-CPI(M) acknowledged the way things are going on with their UF government. They however still hopefully appealed to Gowda to shed Rao's legacy. They wanted the broad thrust of the budget to be cleared by the Steering Committee. The much-awaited Steering Committee met but only for an half-an-hour chit chat. The only discussion was whether Moopanar or Surjit should take over as the convener of this lameduck committee. Seeing Gowda wanting to wriggle out, the Left desperately urged him to stay on. The meeting was soon over. Gowda herded them again for an informal breakfast meet where Chidambaram told them that there is nothing like free lunch, even for the poor. They came out in smug satisfaction over Gowda's assurance that oil prices would not be hiked and claimed the credit for that. But soon came the confusing announcement from Chidambaram that oil price hike would be inevitable. Hitherto only industrialists have been accusing the government of speaking in two voices. Now it is the turn of the official left to get baffled at their own colleagues in the government duping them in two voices. Whether Gowda sheds Rao's legacy or not, it remains to be seen whether the week-long agitation by CPI(M) and the countrywide strike on PSU privatisation would mark the beginning of their own shedding of the legacy of total surrender to the bourgeois parties in UF.

The pre-budget sentiments about the economy indicate all-round gloom. Industry is on a recessionary track, export target has been scaled down and the stock markets have plunged to historic lows. The growth impulses imparted by the costly liberalisation are clearly exhausted. Even the cocksure Chidambaram sounds shaky. The management gurus at the Harvard Business School probably taught him that sheer individual will power can turnaround economies and achieve miracles. That is why he has set for himself foolish targets like 5% fiscal deficit and 4% inflation in CMP. Now, expenditures can hardly be controlled. That is why Chidambaram preaches the virtues of increasing taxation as against cutting down expenditure. Quite ingeniously, he goes around talking of a 'sensible' taxation policy "where the burden will be shared by a larger section of people". The UF government is dragging its feet over 20 Kg. of foodgrains to 6,50,00,000 families at half the present PDS rates which will increase the food subsidy only by Rs.2000 crore but Gowda has readily agreed to the demand by about 1000-odd zero-tax companies for a waiver of MAT which would have fetched enough money to cover more than half of this additional food subsidy. Free lunches, it seems, are the prerogative of the rich.

While the official left demands that the forthcoming budget should reflect CMP priorities, Chidambaram calls for a new consensus among UF partners to bring about a second 'burst' of economic reforms in the next budget. His colleague Maran goes over the head of the Disinvestment Commission and makes announcement about privatisation inviting protests from its chief. When Jyoti Basu advised Gowda to go about his job unmindful of detractors or without apprehensions about the government's fall, Gowda-Chidambaram seem to be sincerely applying it towards the Left. Even while the opportunist left has been unable to influence UF policies they have started making overtures to Congress: while Chaturanan Mishra has called for self-criticism by the Congress, Surjit says the obstacle to the party's joining the UF government is that it has not reviewed and changed its policies.
In this CII era, when the old-fashioned ASSOCHAM came up with an equally old-fashioned Thapar Committee report calling for 40% ceiling on foreign shareholding through FDI, the government responded by announcing automatic approval up to 74% stakes in sectors covering about 80% of areas for FDI. But an India Infrastructure Report made some plain-speaking to this FDI-crazy government when it said out of $150 to $200 billion investment required for this vital sector FDI can meet barely 10%.

Many CMP promises are nowhere in sight. But an amendment to Environmental Protection Act for speedy clearance of projects and similar amendments to Land Acquisition Act to enable industrial and infrastructural projects to acquire land without much hassles are on the cards. It seems the official left which shared the CMP promises to the electorate is in need of as much a kickstart as the sinking economy.


Home > Liberation Main Page > Index February 1997 > ARTICLE