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Chidambaram isolated within United Front

With the Union Cabinet endorsing last week's wage agreement with government employees on Sunday, Finance Minister Palaniappan Chidambaram finds himself isolated within the United Front.

His dream Budget for fiscal 1997-98 has come unstuck after the government capitulated and conceded the demands of its employees unions on the Fifth Pay Commission's recommendations.

Finance ministry officials revealed that an angry Chidambaram has washed his hands off the agreement and blamed some of his Cabinet colleagues for "the government's abject surrender before the trade unions." Home Minister Indrajit Gupta and Railways Minister Ram Vilas Paswan were among those who negotiated the deal with the government staff.

The finance minister's absence from the final round of negotiations with government unions provides further evidence of his displeasure with Cabinet colleagues to support him and save his much-praised Budget from additional fiscal overheads.

One finance ministry official said Chidambaram sees Thursday's treaty on a new wage structure for government staff as a collective failure of the UF coalition. "The finance minister is upset that his warnings on fiscal prudence have been ignored by the entire Cabinet including Prime Minister Gujral," the North Block mandarin said.

At a Cabinet meeting last week, Chidambaram made a detailed presentation to his colleagues, explaining the grave fiscal situation confronting the country and emphasising why the government employees's demands should not be conceded.

"Chidambaram took a tough stand on the issue because he did not want to preside over the liquidation of his Budget at the altar of populism. But he lost the battle when the ministers joined the agitators," the finance ministry official said.

Details obtained by this correspondent from Expenditure Secretary C Ramachandran's office suggest that the agreement will hike the central government's wage bill this year to Rs 457.50 billion from the present estimate of Rs 275 billion.

With the government's revenue collections sluggish this year, nothing short of a miracle can help Chidambaram raise resources for the enhanced wage bill. The only alternative left to the minister may be a radical reworking of his dream Budget.

What will further affect the finance minister is a demand for similar pay hikes from state government and public sector employees. Many fear this -- along with a lack of commitment to fiscal correction in the UF leadership and the absence of consensus within the coalition on public sector reforms -- may compel Chidambaram to quit the Cabinet in a huff.

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