The Bharatiya Janata Party presumably believes that the 8.4 per cent growth registered in the second quarter (July-September) of 2003-04 is akin to the Ponting catch. The achievement was announced on the last day of the year, and since then Delhi has been a beehive of activity. Annual vacations were cancelled, Mr Brajesh Mishra raised the stakes in his poker game with Pakistan, and Mr Jaswant Singh got ready to play Santa Claus.
Within days, the goodies came. I cannot complain about some announcements because I have been demanding them for months. The peak rate of customs duty has been slashed from 25 per cent to 20 per cent, and that is good. Excise and customs duties on a wide range of goods have been reduced, and that too is good. Cars will be cheaper, so will be air travel. The remarkable thing is that nobody is complaining, not even domestic manufacturers who will now face more intense competition.
During the last 12 years, government, entrepreneurs and the middle-class have arrived at a compact. Under the BJP-led government, that compact has become stronger. The government will do things from time to time to keep these classes happy. Urban markets will be stocked with imported goods. Government spending will continue unabated. There will be enough space for scams and scandals, and for making money. It is an urban and middle-class driven strategy of so-called growth.
The disquieting aspect is that there is an unspoken consensus on this strategy. Neither the Communists nor the Socialists nor the Dalit parties nor the Dravidian parties are questioning the rationale behind this strategy. Would the Congress have done anything different if it was in the position of BJP and heading a coalition on the eve of Parliamentary elections I doubt it, because the Congress is as much driven by the urban and middle classes as BJP is.
Let me take an example. The foreign exchange reserves are more than $100 billion, and they are increasing by the day. A dozen ideas on using the reserves have been floated by economists. I have suggested several options that deserve to be examined and acted upon. Not one Opposition party, including the Congress, has seized the issue to present alternative ideas. The finance minister gleefully waded into this pool of silence and announced that anyone can walk into a bank, buy dollars up to $25,000 a year and remit it abroad anywhere he likes, for whatever he wants, and no questions will be asked.
I am sure this brilliant idea was made at a Page 3 party! The ostensible purpose is to create a demand for dollars and stem the appreciation of the rupee. There are many ways in which this could have been achieved, but none has commended itself to the government than allowing $25,000 to be taken out anywhere for anything!
The second round of sops announced on Friday includes grand plans to set up a Rs 50,000-crore agriculture infrastructure and credit fund and a Rs 10,000-crore small and medium industry fund; provide cheaper credit to infrastructure and manufacturing industries; and offer a special bond scheme for senior citizens.
These are what they are announcements. Mr Singh, more than anyone else, knows that the funds cannot be set up in four weeks as promised and, even if set up, may not be operationalised for months or years. Some months ago, the government announced that it would give nearly Rs 2,000 crore to the states to be given to sugar mills to pay off sugarcane arrears to farmers. Not one farmer in Uttar Pradesh or Tamil Nadu has seen the colour of that money. Rural India and the poor have a way of discounting and digesting these announcements. They know they are the fall guys in the curious mixture of selfish politics and self-serving economics that passes for a growth strategy. The only way they can show their anger against the rulers is to vote out the ruling party in the elections. They have done this with amazing regularity.
While this is the rule in state elections, the situation is different in an election to Parliament. Along with bijli-sadak-pani (power-road-water) issues, some broader concerns weigh on the minds of the voters. These include daily-grind issues like security, crime and law and order as well as emotive issues like language, regional pride and building a temple. What will play uppermost in the minds of the voters of one state may not be so in another state. It appears, though, that the broader the alliance the greater the chances of success at an election.
The 2004 Parliamentary elections will be decided by the new generation of voters living in rural India. That voter was born after 1975. He or she is semi-educated, unemployed (or under-employed) and poor. Nothing has happened in the last few years or in the last few days to lift his or her spirits. No political party has so far come out with a grand vision to rescue the very poor of India over 300 million and give them a decent life. Nor is there any strategy to help another 300 million find jobs or occupations that will give them more income, a better house, access to better schools and hospitals and a better future for their children. Every wave of liberalisation seems to bypass 600 million people.
Liberalisation and economic reforms, if they must have meaning to this 600 million, must translate into more greenfield investments of which there has been so little in the last few years. Secondly, they must create new jobs.
If the two leading parties, BJP and Congress, are serious about economic reforms, before they stake their claim to rule the country, they should lay out a well-researched and detailed plan to promote investment and ensure job-creating growth. Both parties must express their readiness to engage each other in a debate on these issues over the next 12 weeks. Absent such a script and absent such a debate, the choice before the people will be between Tweedledum and Tweedledee.
(The author is a former Union finance minister) Write to email@example.com