Neither here nor there

Watching Pranab Mukherjee deliver his budget speech on Friday was like watching a thriller - except that you kept waiting for a climax that never came. He started off well enough, with rhetoric on how fiscal responsibility is dear to the government and how he will return the country to a respectable rate of growth next year. So he led his audience on, having captivated them into believing that there is excitement ahead. But like a badly written script, his movie only disappointed and exasperated thence. The initial promise of a blockbuster, therefore, faded quickly after a well-made trailer, albeit with some comic relief afforded by the good-humoured quoting of Shakespeare and by the minister likening himself to a medic, called upon to administer a bitter pill to the ailing patient which is our nation. (I personally believe an enema would have been in order; pills are for milder afflictions).

Many went on to describe this budget as 'middle of the road' - perhaps delightfully oblivious of the heavy haulers hurtling towards us at 100 kmph (alliteration unintended!). But I think this accurately describes policy under the current government: neither here nor there. Ultimately, it all seems to be an exercise in clinging on to that chair (never mind if it increasingly resembles an electric one).

I thought the 'retrospective amendment' business on the Vodafone deal was an absolute stinker. The Indian government seems to have pioneered a new form of time travel. We are increasingly witnessing instances where actions are taken retroactively. I would say arbitrarily. Taxman needs money? Amend laws and enforce them with retrospective effect. Supreme Court must deliver justice in 2G scam? Cancel allotment of licences done years ago. Why, it must a popular joke in the galleries of power these days. Be kind to me, or I will go back in time and screw your happiness. Why should anyone be made to suffer because you had not put your house in order? If there was mischief involved in the distribution of 2G licences, too bad. Punish the criminals, hang them if you like, but how can you go back in time and cancel licences because YOU botched the process? Foreign investors must be pissing in their pants thinking about putting their money in India. And yet we have ambitious capital account targets.

I watched the Finance Minister being interviewed by a TV-channel post the budget. The interviewer pointed out bluntly to the FM that some of the acts in the budget could actually constitute criminal offences on the part of the government. Case in point is the additional cess introduced on crude oil production by companies like ONGC. The government only just concluded an auction of shares for that company days ago (botched that too). If a private company's promoters were to act the way the government has, they would have been subject to strict action by SEBI. The government has essentially hoodwinked minority shareholders into buying shares at high prices, knowing fully well that this additional cess is going to hurt the company. Why disinvest at all in that case, if every action that you take as a promoter is meant to transfer wealth out of the pockets of minority shareholders including the general public? Similarly, issuing tacit directives to oil retailers not to raise prices before elections must certainly constitute a violation of the model code of conduct - you are using state machinery to advance your own ends only because you are the party in power at the center. How is that not illegal?

What the government is trying to put up is a depraved act of trying to please everyone for all time. You want disinvestment, double digit growth, price stability and fiscal responsibility and yet you won't budge on reforms. I think the finance minister did well to concede in his budget speech that most of India's inflation is driven by supply side constraints. He has the uphill task of removing these structural bottlenecks. Perhaps the government needs to realize that it need not dilly-dally on reforms in order to seem populist. The status quo only benefits certain vested interests which most definitely do not constitute the poorest of the poor whose cause the government claims to have taken up. Multi-brand retail will not hurt the farmer, it will hurt the middlemen. Disinvestment does not hurt the country, it hurts trade unions that represent inefficient workers. Substitution of subsidies with direct cash transfers does not hurt the poor, it hurts the black marketeers who divert PDS supplies for personal gain. Sooner, rather than later, we will have to choose sides. The funny thing is, the choice might be easier than the government likes to think it is.