Managing the fisc

Policies are as good as people who shape them

There is never a dull moment in Raisina Hill’s North Block. Half way through fiscal 2001-02, it is becoming clear that union finance minister Yashwant Sinha will have to re-think his policies with the help of yet another new team if he has to deliver on his budget promises. The budget estimates for fiscal 2001-02 have all gone awry for a variety of reasons, some on which the finance ministry has little, if any, control and some on which its control has been ineffective or lacking. With revenues below estimates, national income below forecast and the pressure to spend in order to stimulate demand, it is not surprising that the fiscal deficit is expected to overshoot its target. Part of the problem lies in having targeted wrongly and over-optimistically, and part is in not having been able to deliver much on a range of policy promises. The first problem is a function of the declining level of competence in the management of the fisc, the second problem a manifestation of a larger political impasse, the inability of a ragtag coalition to deliver good economic governance.

Mr Sinha is not entirely to be blamed for the mess he finds himself in, but he must share some of the blame. His cup is half full and, logically, half empty. How he is evaluated is often a matter of perspective. His well-wishers focus on the half full part, his critics on the half empty side. He is certainly not responsible for the global economic slowdown which has impacted adversely many segments of the economy, nor for the travails of a contentious coalition that seems to have lost its way in government. Some even give him the benefit of doubt on the quality of his policy making team, suggesting that he had little role in choosing his officers and advisors. It is a pity that Mr Sinha has not been able to run his three years in office with a cohesive team. The constant change of guard has hurt, but he must share part of the blame for this. Competence and experience have been at a discount in his ministry of late, and casteism has come to the fore in appointments at the middle level.
Mr Sinha now faces the moment of truth and of opportunity. He can certainly act to bring experience and professionalism back to the top in the ministry. With it he may also find better results at budget time.