Friday, February 29, 2008

Un-Chidambaram-like Chidambaram budget

Indian Finance Minister P.Chidambaram was quite a happy man. He knew the importance of presenting five consecutive budgets, and he acknowledged it right at the beginning. The only other man to have done so was prime minister Manmohan Singh. But there was a catch there. After Singh presented five budgets, the Congress government led by P.V.Narasimha Rao lost the 1996 elections. The party remained in political wilderness for the next eight years. There was a problem with the economic reforms that had to be ushered in at the time. The reforms proved to be beneficial but it was recognised much later.

That is why, perhaps, Chidamabram chose to present a budget whch was focused on social sector -- health and education -- and on agriculture. Not that the finance minister is averse to either of the sectors. But he would have liked to push the economic reforms further. But he held himself back, or he was held back. This was indeed the right thing to do.

When the Congress came back to power as the leading partner of the United Progressive Alliance (UPA) government in 2004, both Singh and Chidambaram were in a chastened mood. They knew that they had to pay attention to the poor people, to workers, to farmers. And the Left parties, for all the stupid reasons, played the salutary role of being a road block in cavalier implementation of reforms.

If Chidamabram had his way, he would have liked to do something more for the manufacturing, financial and service sectors. He would have liked the stock markets to reflect again the feel good spirit of the budget he had presented a decade ago. But this time round he is a much mellowed man. When he anounced the waiver of loans for the marginal and small farmers, he was careful enough to point out that it was no favour being done to the farmers, and that the country should be grateful to the farmers. It is possible to pick enough holes in the relief measures that he had announced for the farmers. But at least he is on the right track. He has kept the farmers in the foreground of the budget theme.

It also seems that he has grown a little tough with the private sector, which is always whining about the unequal playing field and pining for more and more tax sops. The same industrywallahs have no compunction in decrying the sops that the government offers to poor farmers. Chidambaram has stood firm and did not offer any changes in the corporrate tax rates. That has dampened the spirits of the silly market experts sitting in the Engish language TV channels in New Delhi who were whining any way that loan waiver for farmers is not such a good thing. These are the same people who had worked behind scenes to get a governmental bailout when the UTI scandal broke out during the NDA government period.

Chidamabaram who had shown a bit of arrogance of the 1990s was in a sober mood on Budget day in 2008, the same mood he was in 2004. People are bound to call it the election syndrome. But an intelligent man like the finance minister must also be mulling over issues in his own mind, and he must have seen the reason for helping out the farmers. Whether this will really translate into action, and whether this was the right way of going about things need to be debated. But the one thing that is crystal clear is that Chidambaram knows that farmers are important.

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