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Business Commentary/Dilip Thakore

Consensus on the Budget is a good omen

The unanimous passing of the Union Budget and the Railway Budget of 1999-2000 by the Lok Sabha on April 22 is a development of great national importance. It is a milestone event which indicates the maturing of the democratic experiment based on universal adult franchise which began half a century ago in the Indian subcontinent.

These Budgets were conceptualised, formulated and given shape and content by the 18-party coalition government which resigned its office on April 17. Under the provisions of the Constitution, these Budgets presented to Parliament in late February this year had to be passed by Parliament before May 13.

Failure to do so would have necessitated a reversion to the previous tax regime which would have created administrative chaos because some of the tax provisions of the 1999-2000 Union and Rail Budgets became effective on March 1.

Undoubtedly, there are some provisions in the Union Budget -- notably the re-christening of some welfare schemes named after Indira Gandhi and Jawaharlal Nehru -- which are repugnant to the Sonia Gandhi-led Congress Party.

But the fact that three top leaders of the Congress trooped to Rashtrapati Bhavan to assure the President that the Union and Rail Budgets, which were cursorily debated in Parliament, would be passed without amendment (a BJP pre-condition), is proof that in safeguarding the national interest, post-Independence India's politicians are capable of sinking their differences and rising above narrow partisan considerations.

There is much that is wrong with India's politicians, especially politicians of the post-Nehruvian era. Too many of them -- perhaps even the majority -- are selfish, corrupt, communal, casteist, lazy and too myopic to see the national interest even if it were to be magnified by a factor of ten.

Post-Independence India's average annual rate of economic growth has been so low and opportunities for personal advancement so limited, that for the great majority of its citizens, especially in the rural and semi-urban areas of the country, politics is the most lucrative profession of them all.

Hence the great majority of politicians are in the business of national, state, municipal and panchayat level governance to augment their inadequate incomes. However, it is becoming clear to them -- even if belatedly -- that corruption and furthering the national or societal interest are not mutually exclusive.

Besides, failure to attend to the nation's business could well precipitate mid-term polls, an expensive business the outcome of which is uncertain. Therefore, within the political class, there is a growing awareness that on issues of grave importance it is prudent and necessary to unite in the societal interest.

The history of post-Independence Indian democracy offers instances of several occasions when the nation's major political parties set aside their differences on great issues of national importance. For example, at the time of the three Indo-Pakistan wars and 1962 border wars with China, all of the nation's political parties rallied behind the government of the day and in each instance Parliament was solidly united in the national interest.

Indeed, the incumbent prime Minister, A B Vajpayee, though a bitter political rival of Indira Gandhi, publicly congratulated her when the Bangladesh liberation war was won and lauded her as an incarnation of the Goddess Durga riding a tiger.

After the Congress defeat in 1996, neither the 13-party United Front coalition nor its successor, the 18-party Bharatiya Janata Party-led coalition, made any attempt to overturn the reforms that began in 1992 under Narasimha Rao-Manmohan Singh regime. This is evidence that a broad consensus has emerged in Indian politics about the shape and content of the economic liberalisation process.

The spirit of cooperation and consensus that marked the passing of the Budget, raises hopes that it could even insulate second generation reforms from political wrangling.

For a start, given that in the new millennium 50 per cent of all the illiterates of the world will be citizens of India, it is entirely possible for all political parties to agree that the annual national outlay for education should rise from the current 3.5 per cent of gross national product to six per cent -- a promise which has repeatedly been made by almost all political parties.

Moreover, it is very possible for all the major parties to agree that at least 60 per cent of the larger outlay should be spent on strengthening the primary education infrastructure.

If there is a national consensus on the need to eradicate illiteracy in the short-term, as is entirely possible, obviously a massive resource mobilisation effort will have to be made. And quite clearly, the least painful and most expeditious option available to finance a massive investment in the education infrastructure is by way of privatisation of the nation's bleeding public sector enterprises.

It has often been stressed in this column that a global auction of central and state government PSEs could yield over Rs 5 trillion. Given that a fully-equipped contemporary primary-cum-secondary school costs only Rs 50 million to construct, it is entirely possible to eradicate illiteracy (and improve national productivity dramatically) through a bold and committed privatisation initiative.

Nor should it be difficult for the major political parties to agree that a part of the massive sum thus mobilised should be used to retire the public debt which will reduce the Union government's annual interest payment burden of Rs 1.03 trillion.

A second issue of great national importance on which an all-party consensus is entirely possible is to increase the annual outlay for the maintenance of law and order. No fair-minded or objective observer of the national scene will deny that India is grossly under-policed and that the justice delivery system is in a shambles.

The nation needs to double the size of its police force and triple the number of judges and courtrooms immediately. The resources to finance such an overdue initiative could be mobilised by a phased but determined reduction of the large number of "non-merit subsidies". A broad consensus on the abolition of non-merit subsidies already exists.

A similar recent demand for a "firm and irreversible political consensus" on basic economic reforms made by the Federation of Indian Chambers of Commerce and Industry also included the reduction of government employees by 30 per cent over four years as per the recommendation of the Fifth Pay Commission.

Together, these four basic socio-economic reforms -- education, privatisation, law and order and reduction of the Union government's revenue deficit -- are not too much to ask of the political class. Particularly since a broad consensus on these issues already exists in the collective subconscious of most politicians and the people.

The political consensus displayed in the passing of the Budget could with a little effort be extended to these issues of profound importance even while on other matters it is politics as usual.

Dilip Thakore

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