Singhing praises

The real media mega-events were Manmohan Singh and P. Chidambaram’s path-breaking budgets. An excited consuming middle class lapped up expert analyst after expert analyst and, on one day, the budget editions of the pink papers grossed advertising revenues equivalent to an entire year’s.

So seductive was this opera that TV and print media battled each other on budget speech timing. TV was happy with an evening speech, the legacy of the Raj, with prime time media audience watching the FM live, while the print media preferred a daytime speech that allowed enough time to print larger editions and rake in more revenue.

It happens only in India. Government budgets are not media mega-events anywhere in the modern world. In the India of the nineties they had become so because the annual budget had become an instrument of major policy changes. The law of diminishing returns will soon set in as attention moves from policy announcements to performance.

Both P. Chidambaram and Yashwant Sinha found that out fairly quickly. Chidambaram’s budgets were hailed as “dream budgets” and his government quit just in time before the consequence of his decision on the Fifth Pay Commission came home to roost. Sinha’s first few budgets failed to enthuse the audience and if he had stayed on in office it is entirely possible that this year’s budget may have not aroused the media interest that it did.

Perhaps aware of this, Jaswant Singh created enough consternation in the middle and business classes with the help of the Kelkar committee reports to tickle the public imagination and keep everyone glued to TV through a two-hour drone. So happy have the middle and business classes been to see Singh dump Kelkar, that he seems to be making a virtue of a necessity and trying to earn brownie points on the side.

Speaking at a post-budget meeting of the FICCI, Singh jokingly said that he was planning to hang a plate outside his door stating ‘‘Men At Work, Economists Keep Away’’. While that may not be Singh’s quit notice to Kelkar, it certainly is evidence of hubris the morning after. The universal praise from a middle class given some tax benefits, even if they have taken a hit on interest rates, and from the media-invading business community relieved at the rejection of Kelkar’s revenue-earning tax proposals and the acceptance of his revenue giveaways by a minister who seems to have been persuaded that supply-side initiatives can revive corporate and market sentiment, seems to have given Singh a high.

He must wait for the monsoon to set in before he gets so uppity about what economists can do for him. He will need all their creativity to explain away rising inflation and a subdued capital market. This is a good budget, but it is based on a gamble. If the gamble works, Singh can still hope to get that widely coveted prize that eluded Yashwant Sinha for five years, the global Best Finance Minister award. But if growth remains below par — by which I mean below 6.0 per cent — and inflation moves upwards, Singh will see all this praise melt away. Nothing angers the middle class more than inflation and that is a threat a Singh tenure at the fisc certainly faces. It will also dampen demand that Singh so desperately needs to make his strategy click.

The good thing about Singh’s budget was that it said all the right things. Full marks to the speech writer. The problem with his fiscal strategy, apart from the fact that it gambles on growth, is that it hopes ministries will be pro-active in operationalising the private-public partnership he needs to get the Rs 60,000 crore worth projects off the ground.

Singh is not delivering growth through the fisc or even the plan. It is not actual government spending but the leveraging of public funds by private enterprise that is supposed to do the trick. But that requires two things: A pro-active government that can get its act together and a risk-seeking private sector willing to invest.

Singh and his government derive courage on the former by their ability to deliver on trunk roads and the Delhi Metro and they hope to trigger the latter through the feel-good factor. On both counts the government can falter if the rest of the Sangh Parivar refuses to recognise the fact that to get growth going, you need political and social stability. The economics of growth cannot work wonders when combined with the politics of divisiveness. In that sense, the board outside Singh’s room should say ‘Men At Work, Sangh Parivaris Keep Out’. The question is will the Sangh Parivaris listen? After Gujarat, they are convinced that it is their politics alone that can win the BJP another term in office. If that happens, Singh will have to join other ex-finance ministers in the budget media circus and admonish some latter day successor for not understanding economics! We’d love to have him write a column for us!