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VIEWPOINT: KAUTILYA
Sinha Does A Jayasuriya
Sinha rediscovers himself with
a bang after 10 years. But let us not go overboard.
By
Jairam Ramesh
 How
the wheel of time turns. Exactly a decade ago, Yashwant Sinha was set
to go down in India's economic history as the only finance minister not
to have presented a regular budget. It was the time when his prime minister,
Chandra Shekhar, had run foul of the Congress which withdrew its support
from the outside, thereby forcing Sinha to seek a vote-on-account.
Sinha had prepared a reformist budget then and
had initiated steps to seek the safety of the IMF to rescue India from
an unprecedented financial crisis that was staring it in the face of a
burgeoning current account deficit-our version of a currency crisis that
was to strike east Asia six years later. But that was not to be. It was
left to the P.V. Narasimha Rao-Manmohan Singh duo to rescue India from
complete collapse in June-July 1991 and subsequently put it on the path
to economic recovery and expansion. Sinha moved to more saffron pastures
but even he would not have imagined that a decade later he would be presenting
his fourth budget in his new avatar, a budget that has greatly boosted
sentiment, given him and his Government a whole new image among investors,
businessmen and the media but whose impact on fundamentals will unfold
only with time and is based on a wide array of assumptions.
 The
period 1991-2001 has been remarkable for the consensus that has emerged
on the direction of economic policy. Compulsion triggered the 1991 economic
reforms but gradually conviction has taken over. Whatever the rhetoric
of political parties when they are out of power, the fact remains that
the United Front (UF) boldly carried forward what the Congress had started
and then the BJP stepped in where the UF left off. The essential validity
of the Rao-Manmohan-P. Chidambaram line has now been well and truly established.
Moreover, there is not one state government today which is not following
that line of economic thinking and practice. West Bengal and Kerala may
think they are different but in reality they are not.
There is, thus, a fundamental agreement among
those in power in the country on how economic policy should be conducted.
There is no difference between a Vilasrao Deshmukh, an N. Chandrababu
Naidu, a Keshubhai Patel, an O.P. Chautala, a Digivijay Singh, a Rajnath
Singh or an M. Karunanidhi. Even Buddhadev Bhattacharya is talking the
language of these chief ministers. Some are better managers than others.
But all chief ministers today are on the same wavelength and that wavelength
is the same as that of the Central Government. Of course, there is a problem
of posturing. The Congress opposes power reforms in Andhra Pradesh where
it is out of power but pursues them vigorously in Karnataka where it is
in power. The BJP is aggressively reformist in Uttar Pradesh where it
rules but opposes the same reforms in Rajasthan where it is in the Opposition.
In a sharply polarised parliamentary democracy such as ours, where you
stand on an issue depends on where you sit. But that should not detract
from the robustness of the consensus that exists, cutting across the political
spectrum among those in power. What this shows, however, is the need now
to craft a consensus among leaders of the Opposition in various state
assemblies by, for example, coopting them as special invitees to the National
Development Council.
While a consensus has emerged, sadly successive
governments at the Centre have not leveraged it proactively. No government
sees it fit to consult opposition parties except when there is a crisis.
Sinha's budget contains many worthwhile ideas the future of which depends
on Parliament approving new legislation. But if the past is any guide,
what will happen is that the new legislation will be introduced, set positions
will be taken and no effort will be made by the government of the day
to reach out to the other side. US President George Bush is building a
pressure group of governors of different states in support of his economic
policy. Nothing but sheer lethargy has prevented a critical mass of chief
ministers being built up in support of sensible economic policies. Reforms
have long ceased to be merely technocratic solutions. They have now entered
an intensely political phase. Indeed, the second-generation reforms that
Sinha has talked about depend crucially on legislative backing and action
by the states. But the state budgets, in which the real action has to
take place, do not attract the same attention that the Central budget
does.
Sinha's fourth budget has been widely applauded
and rightly so even if he missed opportunities for new initiatives like
a food-for-work programme. But economic management is more than a one-day
match. Growth deceleration and investment famine, the twin challenges
confronting the macro-economy, have to be dealt with resolutely, collectively
and on a sustained basis. The budget only provides the enabling framework.
(The author is with the Congress party. These
are his personal views.)
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