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Politically
Correct
Weighing Weakness
By
P. Chidambaram
Vajpayee
should not worry about his knee. A robust mind is what counts for reforms.
 The
full Planning Commission watched a presentation on September 30. It was
titled "Mid-Term Appraisal of the Ninth Plan". The date, of
course, was beyond the exact mid-point. Actually, three-and-a-half years
of the Ninth Plan (1997-2002) are over and, if any catching up has to
be done, only 18 months remain.
The presentation
would have broken the spirit of a younger, healthier man. Prime Minister
A.B. Vajpayee, I note with regret, is not in good health. Besides, he
is 76, and by all accounts is able to devote only a few hours a day for
hard, focused work. His trusted aides and ministers are in their late
60s or 70s: Advani (73), Jaswant Singh (62), Fernandes (70), Yashwant
Sinha (63), K.C. Pant (69) and Brajesh Mishra (72).
 I
can imagine the Prime Minister's concerns as he came out of the presentation.
Growth in the first three years of the Ninth Plan has slipped from 6.5
per cent (in the Eighth Plan) to 6.1 per cent. In the current year and
the next year, all sectors would have to grow at spectacular rates if
the Ninth Plan GDP growth target of 6.5 per cent is to be achieved. For
example, agriculture must grow at 7 per cent, manufacturing at 10.25 per
cent and trade 7.85 per cent.
Growth is
low because the chronically sick states remain sick. As much as 44 per
cent of India's population is in the states of Uttar Pradesh, Bihar, Madhya
Pradesh, Rajasthan and Orissa. Among the 15 larger states, these five
are at the bottom of the ladder in terms of sdp growth, demographic indicators
and income poverty. While Digvijay Singh and Shekhawat—Gehlot have
tried—and are trying-to take the "m" and the "r"
out of Bimaru, two others, Orissa and Assam, are candidates for
being declared terminally ill.
Since the
Vajpayee-led team took office on March 18, 1998, there has been more hype
than performance in crucial sectors. Take the power sector: the Ninth
Plan target for new capacity is 40,000 mw, but only 24,000 mw is likely
to be added. Commercial
losses of state electricity boards have mounted to Rs 20,000 crore per
year. State electricity regulatory commissions have been set up in 14
states but tariff increases have been stalled by political resistance.
Transmission and distribution losses are not 22 per cent as reported earlier,
but close to 40 per cent. Privatisation of distribution is the answer
to T&D losses, but there is virtually no progress in this regard.
Unholy
Mess: Look at one more example: the Railways. Railway finances are
in an unholy mess. Plan investment targets will not be met (and, of course,
Mamata Banerjee will not allow private investment). There is a huge and
growing backlog in track renewal, modernisation of signalling and other
safety measures. Passenger subsidies are at an all-time high. So are accidents.
The Railways is losing traffic to the road sector. It seems that all the
king's horses and all the king's men cannot put together the Railways
again.
Finally,
there are the perennial headaches. The fiscal situation remains unsustainable.
There was a significant correction in 1996-97, but after that the road
has been downhill. We have had, in succession, the East Asia crisis and
the Fifth Pay Commission (1997), Pokhran and sanctions (1998), Kargil
(1999) and the oil shock (2000). It is a tribute to the resilience of
the Indian economy, acquired thanks to the reforms, that average growth
is still over 6 per cent. But the pointers are discouraging—once
again, we may have rising inflation, high interest rates, depleting reserves
and a depreciating rupee.
So, is all
lost? Certainly not. The mid-term review underlines the achievements too.
Every achievement is because of a policy reform, and the greatest achievement
is the reduction in poverty which has been possible because of the higher
average growth. The mid-term review cautiously admits that the poverty
proportion has declined by 10 percentage points. This, of course, is based
on six months' data compiled by the Department of Statistics. The Planning
Commission will release by the end of the year estimates based on full
NSS data, and I am almost certain that the initial conclusions will be
confirmed. Nothing can gladden the hearts of reformers more than the sharp
reduction in absolute poverty.
Many demographic
indices also point to achievements which are no less significant than
growth and poverty reduction. Since 1990, population growth has declined
from 2.06 per cent to 1.74 per cent and literacy has moved up from 52
per cent to 62 per cent. These are by-products of growth.
Reforms are
not for the weak-hearted. It took enormous courage to tear up the Red
Book on imports and exports, to abolish industrial licensing, to float
the rupee and to reduce income-tax rates. Vajpayee should not worry about
his weak knee, Dr Ranawat will fix it. He should come out of surgery and
the period of recuperation with a robust mind and a strong heart. He has
our best wishes.
(The
author is a former Indian finance minister and a TMC leader).
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