Sophisticated prior psephology indicated a close contest. It proved wrong with the margin of UPA victory. Reams have been written about what the outcome was attributable to. Was it the PM, the Regent, the Crown Prince or the Whole Trinity Was it the potent techno-political Singh-Sonia duo that permitted the dirt of typical politics to be separated from the relative hygiene of an Indian government led for once by an honest, earnest, selfless, intelligent and capable icon of probity Was it the NERG or the nuclear deal Or was it a palpable sense that the lack of performance in 2004-09 was not the previous governments fault but due to the dereliction of voters who had obliged the UPA in 2004 to form and operate with an unwieldy coalition of disparate members who believed only in self-enrichment, immunity, and protecting self-interest Were the voters rectifying their earlier mistake Possibly; we will never know. What passes for deep political analysis is really pseudo-scientific interpretation of flawed opinion polls.
And it does not matter because we have a result. If that is so what might we look forward to for the next five years Galloping reform which the previous UPA government claimed it was hamstrung to engineer Unlikely! The new-old Cabinet suggests continuity; especially with the continued incumbency of so many non-performing ministers in key ministries. It is singularly uninspiring in the reform-accelerating department. There is implicit resistance to overdue reforms within the Congress Party, its UPA partners and its first family. Can we look forward to more rapid delivery of infrastructure which has become synonymous with development Will we consign to the dustbin of history our continued extreme shortages of electricity, water, clean air, and acceptable urban and national transport The exhortative rhetoric will be stepped up. But will faster delivery occur Doubtful! Can we expect more about the pseudo inclusion and participation of the poor (whether rural or urban) into the fabric of what constitutes the modern economy Perhaps, because of the pervading (correct) sense that it would win more votes next time around in 2014.
2014 will prove a tough challenge. The present government should focus carefully on that year every day from now for its five-year rule to be sufficiently productive to assure re-election. By then the Congress led UPA will have been in power for a decade. That increases the likelihood of an anti-incumbency swing; assuming, of course, that the Opposition does not crumble completely but uses the next five years to resurrect, renew and bolster itself by making the right choices in the right directions and avoids succumbing to false demagoguery. Democracies do not work well when Oppositions are fragmented and weak. The electoral debacle for the BJP, Left, and fractured rumps was excellent news for the UPA. It was not for India.
In 2014 the present PM will no longer want to lead. Ten years in that job takes its toll of any man no matter how young or robust; leave alone an ascetic with a triple-bypass approaching 83 appealing to an electorate with a median age of 26. The Crown Prince despite his Clooney-like appeal and charisma will be a risky bet to take with his shortage of ministerial experience and unproven leadership-cum-administrative skills. The Regency may well be needed until the transition is secure. But will India have tired of it by then The Crown Prince will not be permitted by the electorate to ascend to the PMs gaddi in 2014 unless this government delivers what the electorate in its fissiparious, differentiated, glorydesires; and delivers it in spades! One can but hope that the PM with an eye on his place in history takes it upon himself to do just that and the Crown Prince and Empress Regent encourage and urge, rather than block, him from so doing.
That thought of course brings us to the Budget. Many (like the delightful Meghnad Desai the most unlikely Lord one has ever come across) believe that Budgets do not matter (his column in FE, Jun 29). Who remembers or cares about the vast minutiae of trivia and detail they incorporate Budgets are a photo-opportunity for annual grand-standing by Finance Ministers before Parliament. Railway Budgets are even more absurd; an archaic colonial relic that should have been dispensed with in 1948; leave alone continued in the 21st century. It is so typical of Indian politicians to make a religious ceremony out of what even the British have stopped doing because it was so ridiculous! But I would beg to differ. Some Budgets do matter; especially Budgets that determine key inflexion points in a countrys economic history. It is precisely for that reason that this Budgetif done rightshould matter. Because such an inflexion point is precisely what India needs from a new government with a substantial mandate to entrench and make irreversible the course of Indias journey from a sclerotic socialist command-control economy to a partially market-driven economy where the market (whose proneness to episodic bouts of failure is now well advertised) is still excessively controlled by those who do not know better but are reluctant to cede the kind of power that they should never have had in the first place.
This Budget matters not for the detail it might contain or for whether it accommodates everyones preferences while discarding their peeves. It matters more for the signals it emits about this governments overall philosophy on continuing with the path of economic and financial reform toward a more efficient and more globally integrated market economy, on increasing productive public investment while encouraging much more private investment (especially in infrastructure), its sense of direction, its pragmatism, its economic principles, and its social priorities.
If it is a Budget that emphasises trivial adjustments to tax rates and expenditure levels without signalling fundamental future changes in: the overall structure of revenues and expenditures; the nature of incentives; in levels and flows of public debt and deficits; in phased abandonment of absurd price subsidies (and tinkering with their levels) for energy, food and fertiliser; in transforming the whole basis of Indian agriculture and rural income growth potential; while compromising prospects for providing greater levels of income support to the really poor (a sure-fire vote winner); then it will be a Budget that has wasted a major opportunity.
The author is an economics and corporate finance expert.