While the stock markets and the larger body of industrialists appear to have greeted the economic package announced by both Prime Minister Atal Behari Vajpayee and Finance Minister Yashwant Sinha with unbounded joy, it is difficult to understand the euphoria. The decision to allow companies to buy back their shares and to abolish restrictions on intercorporate investments is a welcome step in unshackling corporates but this is really flirting with the periphery. Other decisions such as allowing a minority foreign stake in the insurance sector and trying to resolve the telecom license fee tangle are important in that they show that the government is still trying to move forward, despite the fact that there is considerable opposition to this even within the BJP. There is little point commenting on the proposed horizontal and vertical six-lane corridors as it is obvious that this is unabashed populism - the fact that the project was conceived just a day prior to this only proves the point that it will be yearsbefore it even reaches the takeoff stage.The basic issue which the government keeps ducking is really that of slashing government expenditure on the mammoth public sector and the ever-increasing subsidies and the de-bureaucratisation of the economic system. That, as Vajpayee himself would be the first one to admit, has not happened at all. Vajpayee, along with Home Minister L.K. Advani on Sunday, have won many hearts by quoting chapter and verse from Nobel Laureate Amartya Sen’s works, pointing out that globalisation and economic liberalisation will have no meaning in India if the country does not spend enough funds and effort on improving its pathetic education and health system. As Advani told the FICCI audience, if India’s population is neither educated (mere literacy is meaningless) nor healthy, it will never be able to take advantage, or even be able to respond to, the challenges and opportunities thrown up by globalisation. The question, however, is: what does the government plan to do about this?For years, liberalisers such as Manmohan Singh and P. Chidambaram have been arguing that instead of burning money in loss-making public sector units (PSUs) or in wasteful subsidies which don’t even reach the target audience, this money should be spent on education and health. The fact, however, is that the government is unable to take any big initiative on this front - its announcement to close down just eight chronically sick PSUs has been rejected by the Cabinet which recommended asking the BJP’s ally Mamata Banerjee for her opinion, since some of these PSUs were in West Bengal!What is interesting is that two of the measures announced by Vajpayee - share buyback and removal of restriction on intercorporate investment - are precisely those which his Cabinet colleague M. Thambidurai has been opposing for many months in his capacity as the minister in charge of company affairs. In which case, Vajpayee’s announcement could just be an indication that he’s getting on top of things in his government.That, if proved correct, is encouraging.
