Fifth Column: Pie in the Sky

India Today
Nov 16, 1998

FIFTH COLUMN
Pie in the Sky

Vajpayee's grand economic agenda is a non-starter

Tavleen Singh

These past couple of weeks the prime minister has been desperately trying to dispel some of the distrust that surrounds his Government's economic abilities. Almost every other day he has announced what newspaper headlines have described as "mega economic packages". First came the announcement that there were plans to build six-lane, 7,000 km highways from Kashmir to Kanyakumari and Saurashtra to Silchar. Rs 28,000 crore has allegedly been set aside and work is scheduled to begin before the year ends. The same package promised a new telecom policy within two months, the building of five new airports and permission for Indian companies to buy back their shares in an attempt to lift the sagging spirits of the stock market.

Within days of this announcement came a further mega economic package. The Cabinet decided to allow duty-free imports for "mega power projects", amend the Land Acquisition Act and make it easier to acquire land for building infrastructure, clear 12 major foreign investment proposals collectively bringing in Rs 4,800 crore and to close down eight sick public-sector units by giving their employees the golden handshake.

Phew! Mega indeed. Alas the distrust persists in the hearts and minds of Indians, as can be seen from the panic over salt that spread across the country this past week. All it took were rumours of an impending shortage, spread by a handful of grasping traders, and consumers resorted to panic buying. They didn't want to be caught unprepared as they had been by onions and potatoes.

Desperate officials went on television to reassure people that there was more than enough salt in stock. Tata Salt published full-page advertisements saying, "There is absolutely no repeat no shortage of salt." But the average consumer remained sullen and untrusting.

Do you know why Mr Prime Minister? Because more often than not your Government has shown an inclination to make tall promises without understanding either the implications of these promises or the effect they have when they are broken. The finance minister, please remember, rashly promised a few months ago that there would be a visible upturn in the economy by September. Not only is nobody sure why he chose September for his happy prediction and not October (Diwali) but his prediction proved wrong. He has not yet explained why this happened.

Now let us examine the mega economic packages. Spend a few moments reading between the lines because with all government endeavour it is between the lines that the truth lies. So we have this promise of a giant network of highways that will one day be imprinted across India like a six-lane cross. Other than the prime minister's private circle of courtiers and cheerleaders everyone knows it isn't going to happen. It can't for the simple reason that it sounds as scatterbrained and foolishly grandiose as the network of state expressways Jagdish Tytler, as surface transport minister, promised us in the early '90s.

Not one kilometre has so far been built because Tytler had quite simply not thought the plan through. He seriously believed, for instance, that all these thousands of kilometres of road could be built and operated by foreign investors. He appears not to have been aware that even in countries where private investment has been permitted in roads, nearly 70 per cent of the money has to come from the government.

Vajpayee's road builders appear to be as much in cloud cuckoo land. They seem not to have realised that instead of building roads in the sky a credible "mega" idea would have been to identify one road that is really used, Delhi-Mumbai for instance, and turn that into your first six-lane highway. Even this is grandiose enough when you consider that there is not a single kilometre of really modern road (by world standards) anywhere in India and that the minimum cost of such a kilometre is Rs 4-6 crore.

Tied up closely with the building of roads is the land acquisition problem. The prime minister tells us the law will be amended. But when you read the small print you discover the Act dates back to 1894. We don't need to amend a law that is over a hundred years old; we need to throw it away and start again. There are several other areas of economic activity which are controlled by equally outdated laws, the cable television industry for instance. Atal Bihari Vajpayee would do well to identify these laws and simply throw them away.

Finally, there is the golden handshake to employees of eight public-sector units. Reading between the lines I discovered to my horror that it is going to cost Rs 517 crore to get rid of 11,000 employees. These eight companies lost more than Rs 200 crore of taxpayers' money in 1997-98 alone. Now we have to pay this hefty golden handshake at a time when the average Indian can barely afford to buy vegetables. Does it make sense?

Of course not. But Vajpayee is yet to show us that he realises it is wrong to continue pampering a few thousand government employees at the cost of the rest of the country. This is what past governments have done, which is why we continue to pour good money after bad to keep our public sector running. Can we afford to do it any more? For that matter, can we afford a government which is planning to double the salaries of three lakh public-sector employees at a time when onions have become a luxury item for most people?

If Vajpayee's economic advisers can't come up with any better ideas, he should get rid of them before it's too late. That would really be a mega economic package.

Issue Contents | Write to us | Subscriptions | Syndication