Call this tough?

Two incidents show the Vajpayee government surprisingly ill-prepared to cope with the fallout from the tough economic decisions it has been promising to take. After a series of warnings, the country had begun to brace itself for a number of harsh economic measures. So when government backs off from a pre-budget hike in the prices of kerosene and LPG, it is a disturbing sign of politics taking charge of the economy. The retreat was sudden and rapid and caught the President of India in mid-speech, as it were, advising a session of the joint Houses of Parliament that the government was determined to be tough. It was a worrisome performance, retreating before a shot had been fired, reminiscent of the rollback days of 1998 when tough measures were announced only to be withdrawn within hours. So what went wrong this time? It is being put out that the allies exerted pressure. In particular it is said the price hike has been delayed to give Chandrababu Naidu8217;s candidates an even chance in local body elections.

It is hard to believe the government had not anticipated trouble within the ranks of the National Democratic Alliance or based its decisions on a broad NDA consensus. The next fortnight will be used to win over powerful allies like Naidu and fiercely populist ones like Mamata Banerjee and Om Prakash Chautala all of whom the government should have consulted in the first place. They should have got an opportunity long ago to say their piece in a coordination council session or wherever it is that members of the NDA meet, thrash out differences and reach a consensus. Given an opportunity to argue his case, the Finance Minister would surely have been persuasive and, failing that, been able to alarm the allies into being cooperative. An embarrassing climbdown could have been avoided. The price hikes will come through eventually because rising international oil prices have made it inevitable. But to be seen to surrender to pressure, even if for a few weeks, will surely encourage all the opponents of economicrationality to launch their agitations. And it does not speak highly of the government8217;s concern for the health of the economy that it is prepared to hold back bitter medicine because a colleague needs to capture a few more votes.

The omens on downsizing the government are not good either. It was to be expected that Minister of state for administrative reforms Arun Shourie8217;s plans for reducing jobs and merging departments would come apart on the twin rocks of political and bureaucratic vested interests. So it is rather late in the day to discover that the VRS proposed for government employees has little political support in the cabinet. Since the opponents of the plan do not seem to care that the costs of bloated government departments are unsustainable, the prime minister should take a tough line right there in the cabinet. He should also hire outside management consultants if senior government secretaries are too busy to decide about the merger of departments. The public will be better persuaded about the necessity of subsidy cuts and hikes in the prices of everything from LPG to electricity, water, public transport etc., all of which are on the anvil, if more resolve is shown about cutting costs in the government.