Giveaway governance

It must be a sobering thought for P. Chidambaram 8212; indeed for India 8212; that the previous time he was finance minister, in the Unite...

It must be a sobering thought for P. Chidambaram 8212; indeed for India 8212; that the previous time he was finance minister, in the United Front UF government of 1996-97, Left-Lohiaite colleagues forced upon him an over-generous interpretation of the Fifth Pay Commission8217;s report. The UF ministers deputed to negotiate with the unions in 1996, included such redoubtable fiscal conservatives as Ram Vilas Paswan. They went in for a huge giveaway, pushing up salary bills for the Centre and state government. The Fifth Pay Commission proved a millstone for the NDA government and is, ironically, a residual headache for Chidambaram now. In a week when there seems to all-party consensus on the proposed National Rural Employment Guarantee project, it would be prudent to ask whether India is, yet again, headed down the same ruinous road. Competitive populism, with the government and opposition outdoing each other in commending the employment guarantee scheme, is back. Never mind that, three years down the line 8212; when the scheme is spread across India 8212; it could cost the taxpayer a massive Rs 1,50,000 crore.

There are other areas too on which all parties seem to agree 8212; even the BJP and CPIM, the AIADMK and the DMK 8212; such as the need to amend the Constitution and force private professional colleges to reserve a bulk of their seats for state-chosen castes. There is no time for debate on rights of private entrepreneurs, no care for what this threatened amendment may mean for the possible opening up of higher education to private investment and FDI. Taken to its logical absurdity, this will result in pressure to extend the reservation principle to private schools, even private businesses. As for the National Rural Employment Guarantee project, the next major election will probably see a party manifesto promising to extend it to urban areas, to widen its scope from one member in a family to two, of course, enhance the promised wage.

Where is this headed? Taken together the Centre-state debt burden and pensions commitments is already 140 per cent of GDP. The good work of 8212; and goodwill from 8212; the first phase of reforms is being frittered away. What remains is a public finance system being run on credit cards. Soon enough, the recovery agents will come home. Any one of the political parties responsible for the current freebie consensus will be in power. In 1991, they mortgaged India8217;s gold. What8217;ll it be next time?