Post-budget, Right-Left divide will become wider

Those who had expected the budget proposals to signal a flying start to the currently stalled economic reforms in keeping with Narendra Modi's reputation for decisiveness would be disappointed.

Instead, what they saw in Finance Minister Arun Jaitley's presentation was no more than a tinkering with the earlier budgets with the raising of the income-tax limits (which has virtually become an annual feature) and lowering of the prices of laptops, mobiles and other consumer items - all intended to keep the Bharatiya Janata Party's (BJP) key constituency, the middle class, happy. The easing of home loan terms will also have the same effect.

At the same time, the proposals can be said to have underlined a sound, unspectacular beginning by a government which is apparently in no hurry to make an impression since it is aware that it is here to stay for the foreseeable future.

There is a sense of reassurance, therefore, and even of continuity, at this uncharacteristic demonstration of sobriety by a government whose prime minister has sometimes been described as a bulldozer.

This impression of a go-getter was confirmed by the proposals in the railway budget for bullet trains and making railway stations look like airports. The raising of fares (despite a partial roll-back) and of freight charges also suggested that the government was unconcerned about administering a "bitter" medicine and eschewing the kind of populism which characterized the previous regime.

The budget, however, doesn't display that kind of boldness although it has been suggested that a show of derring-do was needed in view of the plummeting of the growth rate from 8-9 per cent to below five. In contrast, all that the government evidently wants to do as its gets off the starting line is to stabilize the financial situation by not letting the fiscal deficit to cross 4.1 per cent of the GDP, promise a reduction of wasteful expenditure, viz. subsidies, via a monitoring commission, and hope to attain an achievable growth rate of 7-8 per cent in the coming years which is expected to keep the inflation under control.

In its present sombre mood, which may be the result of a perusal of the not very uplifting economic scene, made even more worrisome by the prospect of drought in India and turmoil in Iraq, the government was apparently not in the right frame of mind to make any dramatic announcements like doing away with the retrospective tax proposal, which would have been loudly cheered by the corporate sector.

Its decision, however, to set up a committee of the Central Board of Direct Taxes to examine the issue gave the Congress an opportunity to mock the government's earlier scrapping of the various GoMs (groups of ministers) and EGoMs (empowered groups of ministers) which the Manmohan Singh government was in the habit of setting up to look at contentious issues.

The difference, however, between the two governments about these supposedly temporizing measures is that the Modi administration is its own master unlike its predecessor, which had to look over its shoulder to see whether its moves had the approval of the Congress president, Sonia Gandhi.

In contrast, the new committees would adhere to the guidelines set by the government and not by the party or the predilections of an extra-constitutional body like the National Advisory Council (NAC) led by Sonia Gandhi. However, Jaitley's contention that the government's right to undertake retrospective legislation is "unquestionable" shows that the people in the corridors of power generally have the same mindset.

For the present, the Congress and other opposition parties have been quite vociferous in their protests, as may be expected in view of the virtual "tradition" that has developed where the government's opponents cannot think of anything other than criticism. They appear to believe that praising any of the government's acts will doom their chances of returning to power.

It is the debates in parliament, however, which will show where the different parties stand in relation to the ways to revive the economy. While the Left and the Hindi heartland parties owing allegiance Ram Manohar Lohia's socialistic prescriptions are expected to persist with their earlier lambasting of the economic reforms, it is the Congress's attitude which will be interest.

Already, members of the party's left-of-centre brigade like A.K. Antony and Jairam Ramesh have opposed foreign investment in the defence sector and highlighted their commitment to "social justice", suggesting that the party is returning to its credo of Nehruvian socialism.

What this means is that even if sections of the media have argued that Jaitley has carried on from where his predecessor in the finance ministry, P. Chidambaram, had left off, there will not be many in the Congress who will see the link.

In political terms, therefore, a gulf can be said to be opening up between a pro-reforms BJP and the anti-reforms Congress and other opposition parties, making the distinction between the Right and the Left in the country all the more stark.

What is ironical is that it was the Congress which started the reforms in 1991, but it is now the BJP's turn to carry it forward.


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