Budget for a bargain

The NDA has often been called the ruling alliance with a built-in opposition, much like the United Front used to be. But the BJP is supposed to be one party and it cannot behave like an alliance partner. Asking for a rollback of budgetary policy is becoming a habit with the BJP. It amounts to running with the hares and hunting with the hounds. The BJP must make up its mind on whether it is a party in government or in opposition.

It is entirely possible that Finance Minister Jaswant Singh factored in this protest element into two of his more unpopular decisions, the hike in urea prices and the 100 basis point reduction in the interest rate on public provident fund. Given that the market was expecting only a 50 basis point cut, which would also have been unpopular with the middle class, the finance minister may have deliberately gone in for a 100 basis point cut, hoping to roll that back to 50 basis points after allowing some of the oppositional steam to be let out. Even on fertiliser prices there is a sneaking suspicion among analysts that the minister has made provisions for a rollback. Indeed, rollbacks in response to popular sentiment or to parliamentary opinion is understandable in a democracy. What is, however, plainly unacceptable is for the ruling party to lead the charge. It is preposterous that the president of the BJP and the Union minister for agriculture should themselves be demanding rollbacks of budgetary policy. This is unacceptable and goes against the concept of cabinet responsibility.

On the fertiliser price hike, no one can fault the finance minister’s economic logic. Even though he has been at pains to convince all and sundry that he is no economist and is only a politician — an entirely superfluous plea since no one has ever charged Singh with being an economist — the justification for fertiliser price hike is more economic than political. Everyone knows that it is a political hot potato, more on account of the political power of the fertiliser lobby than on account of the farmers. So Singh and the PM should be educating their party president and their minister for agriculture rather than yield to their blackmailing tactics. The finance minister is entirely correct in arguing that if one element of the budget is rolled back, other sections of society will similarly mobilise on other counts. For this reason, Singh made a strategic error in appearing conciliatory at the post-budget meetings of the two federations of industry and commerce when there were demands for the rollback of the dividend distribution tax and other measures. The finance ministry gets enough time to do its homework on tax and other proposals and enough time to seek feedback from various sections of society. Once all these inputs are factored in, the finance minister should stand his ground.