Why did Pranab act like an accountant?

By M H Ahssan

To say it was a disappointment would be putting it rather mildly. The Congress party, it seems, has suddenly become a stickler for Constitutional propriety. The government could announce changes in foreign direct investment norms a few days ago but found it rather hard to provide fresh funds to those who have lost their jobs in labour-intensive, export-oriented industries such as textiles, garments, gems and jewellery, leather and handicrafts. Not even crocodile tears were shed for them.

There were expectations that a grandiose announcement would be made about a low-cost housing scheme or, perhaps, an insurance scheme for workers in the informal sector. There was speculation about an expanded crop insurance programme or new policies to step up spending on infrastructure, health-care and education. But nothing of the sort came. In the recent past, Budget speeches have been statements that spell out the ruling party’s economic policy priorities.

What the Union finance minister, Mr Pranab Mukherjee, read out in the Lok Sabha on Monday was a bland, matter-of-fact statement-of-accounts of the country’s balance-sheet over the last 12 months. Twenty-five years after he had last presented a Union Budget, he chose to not succumb to the temptation of articulating the government’s new promises, policies and programmes on the economic front in the run-up to the 15th general elections scheduled for April-May.

Perhaps, Mr Mukherjee is not a free agent. Perhaps such announcements are better made by the Congress president, Mrs Sonia Gandhi. Perhaps the release of the Congress manifesto may be a better occasion to make such pronouncements even if the event attracts fewer television viewers.

What the balance-sheet has revealed is pretty grim and ominous but not entirely unexpected. A positive fallout of the Interim budget speech is that the government has now openly stated that it is postponing the fulfillment of the deficit targets specified in the Fiscal Responsibility and Budget Management Act that had become an article of faith of sorts for the former finance minister, Mr P. Chidambaram.
Thus, the fiscal deficit as a proportion of GDP for the current fiscal year is up to a level of 6 per cent against the 2.5 per cent budgeted for with the deficit itself widening two-and-a-half times, while the revenue deficit is up from one per cent of GDP budgeted for to 4.4 per cent, the deficit itself going up more than four times. This is hardly surprising since the government’s tax collections are down Rs 62,000 crores while its total expenditure has exceeded the Budget estimate by over Rs 150,000 crores.

Mr Mukherjee said that “in the days of financial stress, tax rates must fall and our ability to pay taxes must rise”. He also stated: “We are going through tough times” and remarked that “current indications of the global situation are not encouraging”. Earlier he had remarked: “Extraordinary econ-omic circumstances merit extraordinary measures”, adding immediately, “now is the time for such measures”. The obvious question that arises is why the government chose not to ann-
ounce a third economic stimulus package.

Can those who have become unemployed afford to wait for the new finance minister to announce the full-fledged budget for 2009-10 in June? Would new policy announcements for the proverbial aam aadmi not make good economic sense as well as good political sense? After all, it is none other than the Prime Minister, Dr Manmohan Singh, who is fond of saying that there is no difference between good politics and good economics.

Who knows? A few big-ticket announcements may still be made before the Election Commission announces the dates of polling and the model code of conduct comes into force. The bigger issue is that even if such announcements are made, these may not materially impact the outcome of the elections or significantly influence voting behaviour. Yes, in the past, pre-election announcements have not helped stem anti-incumbency sentiments. But that need not have prevented the Congress and the UPA from trying a bit harder? The railway minister, Mr Lalu Prasad, certainly made no secret of his intentions to increase his popularity when the Interim Railway Budget was presented on Friday.

The question, thus, goes unanswered. Why did the accountant in Mr Mukherjee gain precedence over the politician in him? If Mrs Sonia Gandhi knows the answer, we would have to wait for her reply.

One last crib. Why did the acting finance minister stick to only one quote from Nobel laureate Mr Amartya Sen on the need for a new commitment towards “security” during an economic downturn. Our favourite Bengali-babu could surely have found an appropriate couplet or two from the voluminous works of the other Nobel laureate from his home state, Rabindranath Tagore, instead of concluding his speech by merely stating that “our people will surely recognise the hand… that alone can help our nation on the road to peace and prosperity”.