When Harold Macmillan, the former British Prime Minister, was asked what worried him most, his reply was ‘Events, dear boy, events’. The new government is just about four weeks old and it is already experiencing how uncontrollable the world around it can be. There has been the sudden death of Gopinath Munde, the reopening of the rape case against Meghwal (why cannot he be suspended until his case is settled?), a sudden rise in the price of onions and now the impact of the troubles in the Middle East on stranded Indians.
The new government was elected with very high expectations of swift action. The Prime Minister did surprise us when he invited the SAARC heads of government. He reinforced this with his 24×7 style of government, the discipline maintained by his colleagues in not openly fighting over Cabinet posts, and more recently with his visit to Bhutan.The Prime Minister’s speech winding up the debate on the President’s address was a tour de force. Here was a PM talking to the nation; not just the houses of Parliament.
Even so, the expectations are so high that the government’s first problem will be to convince the public that even with the best will in the world, things take time to be completed. Inflation will only come down over the next six to nine months, not sooner. Blaming hoarders is old hat escapism; real policy will have to be implemented on releasing food grain from warehouses, importing scarce commodities in a timely fashion and removing supply side constraints to solve the long run problems.
The Budget, which will set the mark of the new government, will have to be tough since the previous government has left behind a scorched earth. There is not much room for even routine expenditure, let alone new sops. The government will have to bite the bullet and pass on the rise in oil prices to the consumers. If it falters at the outset, it will never recover initiative. Petrol users are by no definition the deserving poor or even the neo-middle class. Every rupee of subsidy to the better-off is a rupee added to the deficit that will only stoke inflation. Price subsidies are not the answer to inflation; exactly the opposite.
The real danger, however, from the Middle East is not about oil price rise. There is a serious and long run civil war taking place between Shias and Sunnis across the territory of the old Ottoman Empire. During the nineteenth century, Muslims of South Asia used to look to the Khalifa in Istanbul as their spiritual leader. Anti-British sentiments among Muslims centred on their anger about Britain’s enmity with the Sultan. When the Ottoman Empire lost the First World War, new boundaries were drawn by the Allies which are now being redrawn.
Instead of Syria, Iraq, Lebanon, Jordan, we are about to have separate Shia and Sunni states with a new Kurdistan as …continued »