BOLD POLITICS, NOT SO BOLD ECONOMICS

By Amulya Ganguli

The boldness associated with Narendra Modi hasn’t been evident so much in the budget proposals as in two other events preceding it – the appointment of his ManFriday, Amit Shah, as the BJP president and the railway budget. In contrast, the general budget has been a tame affair, focussing on containing the fiscal deficit at 4.1 per cent of the GDP and raising the cap for foreign investment in defence and insurance.

There was no move to do away with retrospective tax which has been seen as one of the biggest obstacles for investments. Not only that, finance minister Arun Jaitley’s assertion that the government has a “sovereign” right to impose retrospective taxes shows that people in the corridors of power have the same mindset, irrespective of party affiliation.

Arguably, the Modi government’s generally business-friendly attitude will dilute the detrimental impact of support for retrospective taxes, which even the finance minister who imposed it in 2012, Pranab Mukherjee, now the President, said was a step no one was pleased to take but was sometimes necessary. Only the coming months will show whether the investors have been reassured or still harbour reservations.

Although the corporate sector has by and large welcomed the budget despite the absence of what is called big ticket reforms, the non-BJP parties have been criticizing it for diverse reasons. While former prime minister Manmohan Singh has said that it has no road map, Congress president Sonia Gandhi claimed that it was replicating the Congress’s programmes. Few will quarrel with the deduction that this meant that the Congress did not have a road map!

Since it is the “tradition” in India for the opposition to oppose irrespective of the merits of a case, one can expect that the budget will be pilloried by the Congress, the communists and the other opposition parties during the debate in parliament. Their common refrain will be its supposedly anti-poor orientation because of the pro-business tilt which is associated with Modi.

The result will be that the Left-Right divide in Indian politics will become more pronounced. While the communists and the Hindi heartland parties which abide by Ram Manohar Lohia’s casteist-socialistic prescriptions are bound to say that the government has ignored the concept of social justice, which is interpreted in terms of providing sops and subsidies to the underprivileged, any support which the Congress may have been expected to give to the continuation of economic reforms is unlikely because the party is seemingly returning to its line of Nehruvian socialism.

As much is evident from former defence minister A.K. Antony’s opposition to the government’s decision to allow foreign investment in defence and former rural development minister Jairam Ramesh assertions in favour of social justice. Those like Manmohan Singh and former finance minister P. Chidambaram, who may have been expected to support the pursuit of economic reforms, are likely to keep quiet, as they did when Sonia Gandhi and her kitchen cabinet, the left-of-centre National Advisory Council (NAC), pursued their populist line based on the distribution of freebies.

If the budget is seen as something of a damp squib, the reason is that the railway budget a few years earlier had been seen as typical of Modi’s gung-ho approach with the outlining of plans for introducing a diamond quadrilateral of bullet trains linking the four major cities of Delhi, Mumbai, Chennai and Kolkata just as the golden quadrilateral of highways will do.

The construction of highways languished during the last government, but there is little doubt that the both these infrastructure projects will get a boost under Modi. The raising of railway fares and freight charges – although the fares of suburban trains were rolled back because of the impending elections in Maharashtra – had also shown that Modi was not hesitant about administering “bitter medicine” for the sake of development.

In political terms, Modi can be said to have given a sour dose to the RSS by choosing his faithful aide-de-camp, Amit Shah, for the BJP president’s post. Over the last few years, it was the RSS which had the prerogative to make the choice. After it decided to oust L.K. Advani from the post in 2005 following his praise of Mohammed Ali Jinnah during a visit to Pakistan, the RSS chose the unprepossessing Rajnath Singh to be the party chief.

When his four-year term ended in 2009, the Nagpur patriarchs asked Nitin Gadkari to step into Rajnath Singh’s shoes. A few years later, when Gadkari faced charges of sleaze, the RSS gave the post back to Singh. Now, however, it has had no say in the selection process – or, at least, whatever it said had no effect on the choice, for Modi had decided to place his own man in the key position.

As is known, the Gujarat strong man trusts few people and prefers to work in tandem with a small group of hand-picked individuals. If Jaitley heads this group around the prime minister in the government, Amit Shah is Modi’s man in the party. The fact that Shah is embroiled in the criminal case of a fake encounter did not bother Modi since he is not concerned about such “technicalities”.

The choice was made easy by Shah’s success in “delivering” U.P. to the BJP where it won 71 of the 80 parliamentary seats. Shah was in charge of the campaign there. The RSS, however, will not be overjoyed. It could not control Atal Behari Vajpayee. Now, Modi, too, is following his own line.