Promises to keep

Yashwant Sinha is certain his second budget will not suffer the fate of his first at the hands of political and special interest lobbies. He says there will be no more backtracking. This is reassuring. The credibility of his proposals will improve with the knowledge that the budget scheme has been carefully worked out. Busin-essmen, farmers and households can make plans for the next year without having to worry about mid-course tinkering and second thoughts. Part of the reason for Sinha8217;s confidence arises from the fact that he has been able to anticipate and take precautions against political trouble. In a well calculated move, he allowed steam to be vented prior to the budget when the government8217;s most important subsidy-cutting exercise on the public distribution system and urea was announced. The predictable uproar followed by a measured retreat have had the effect of insulating the budget from populist politicians and the finance minister from the charge of caving in to pressure.

A different kind oftactic has been used to outmanoeuvre opponents of economic reforms. Sinha reveals that he has had wide-ranging discussions with the Swadeshi Jagran Manch. It is not surprising all is quiet on that front just now. The specifics of the finance minister8217;s 8220;second generation of reforms8221; were omitted from the budget speech. They will appear in a discussion paper. Everybody has some breathing space. But while it is sensible, after the political storms insurance and patents ran into, to look for a consensus on deeper, wider reforms, the economy cannot wait endlessly. On public sector reform, the discussion has been going on inconclusively for years. The Disinvestment Commis-sion8217;s recommendations should be implemented without wasting more time. Every finance minister since Manmohan Singh has anticipated thousands of crores of rupees from PSU disinvestment but failed to deliver. Sinha expects to exceed his target for the current year but only through the highly dubious device of cross-holdings and buy-backs. Hisnext target for disinvestment is Rs 10,000 crore which is modest in relation to what can actually be realised if the Disinvestment Commission8217;s reports are acted upon systematically starting early in the year. No backtracking here, on any account. But Sinha should concentrate on privatisation, internal reform and raising productivity. PSUs should not be regarded as sources of emergency funds late in the financial year when other calculations have gone wrong.

It has been announced there will be no ad hoc concessions on customs and excise duties after the major rationalisation in rates. This is welcome, will reinforce the commitment to transparency in decision-making and make for a predictable business environment. Above all Sinha must stick to his promise to cut unproductive expenditure. Otherwise he risks sending the economy into a tailspin. The budget, he says, has provided the fiscal framework for a reduction in interest rates. If that comes about it will be the major stimulant to investment and economicgrowth. But everything depends on government borrowings being brought down drastically. The one rollback the country needs to see is a rollback on wasteful spending.