The Union budget provides an occasion for the UPA government to end
its cosy ties with business houses and recognise the political economy
of pain and deprivation
In his memoirs of his years as Finance Minister, Confessions of a Swadeshi Reformer,
Yashwant Sinha writes, somewhat regretfully, that “economics in India
has always been dominated by politics. My experience as Finance Minister
proves this point beyond any doubt.” After detailing many attempts from
within and outside the sangh parivar at contesting and suborning his
presumably good policies and equally good intentions, Mr. Sinha sums up a
Finance Minister’s conundrum: “Elections were important and winning
them was also important. But we had to remember our responsibility was
not only to the present but also to the future. Good economic policies
could not, and should not, be sacrificed at the altar of political gain
for the present.”
It remains to be seen whether Finance Minister P. Chidambaram will be
able to avoid the “populism of the present.” After all, this will be the
last serious budget before the political system drifts inexorably
towards partisan battles of the next general election. Hence, the last
chance to rectify not just a difficult economic situation but also to
rescue it from political opportunism, and to salvage the idea and
principles of economic reform from a soggy moral calculus.
In the process, Mr. Chidambaram also gets another shot at restoring the
United Progressive Alliance dispensation’s reputation as competent
manager of the national economy. On a personal note, he can be expected
to want to use the budget to reverse the damage the economy suffered
under Pranab Mukherjee these last three years.
Three obligations
However, a budget is not just an exercise in balancing books; it is the
finest instrument for showcasing a regime’s political philosophy and
notions of public morality behind its economic priorities. The power to
impose taxes — and the expectation that citizens should joyfully submit
to this demand — carries with it the ultimate democratic responsibility.
When on February 28, he stands up to present his budget, Mr.
Chidambaram will have to be mindful of at least three specific
obligations that any Finance Minister needs to always keep in mind.
First, the budget cannot be an exercise in favouring and rewarding (or
punishing) this or that business house. Easier said than done. Mr.
Chidambaram is known to have friends in the corporate crowd. Perhaps it
would be unfair to suggest that the Finance Minister would allow his
friendships to cloud his judgment; nonetheless, it will not hurt if he
were to be reminded of The Economist’s sound advice to
policymakers: “promote capitalism, not capitalists.” This decade-old
mantra remains valid and Finance Ministry mandarins will need to
demonstrate that they are capable of making a distinction between the
shabby interests of this or that capitalist and the healthy requirements
of a complex and lawful economy.
There are good political reasons to heed this sage advice. The Finance
Minister knows — as do his colleagues in the Congress party and the
government — that much of the UPA’s political difficulties have arisen
on account of bad blood among the business houses. The genesis of the 2G
controversy can be traced to greed and rivalry among corporate honchos.
This un-moderated rancour within the corporate world soon sought — and
found — passionate partisans and motivated advocates in ‘civil society.’
A mock anti-corruption “movement” was unleashed to distract attention
away from the excesses and illegalities of the corporate world. If Mr.
Chidambaram still chooses to play favourites among the corporate houses,
there will be a heavier political price to be paid by his party.
Business rivalries have already produced a different kind of
disequilibrium. Corporate disputes have allowed the Supreme Court —
rather some judges — to impose their own ideas and principles on the
political executive. Judicial interventions and pronouncements are then
worked upon to crank up anger and partisanship against selected
political rivals.
Nonetheless, it must be presumed that the Congress has not totally shut
down its political antennae. Its leadership knows that many of these
captains of industry have an interventionist political agenda. It is no
secret that a sizeable section of the Mumbai club is keen to rearrange
the ruling arrangements in New Delhi around, say, a Sharad Pawar or a
Narendra Modi after the next Lok Sabha elections. There is no earthly
reason why the budget should seek to mollify these very greedy and
politically ambitious business houses that have proved so intractable
these last few years. Rather, the corporate bluff must be called.
Promoter of social good
Secondly, the budget should reveal a government that is not just wedded
to the idea of wholesome public interest but is also cognisant of its
obligations to be the ultimate promoter and protector of the social
good. This basic democratic obligation has somehow been lost sight of in
recent years. The budget provides yet another opportunity to the UPA
government to satisfy the citizens that it is not in thrall of crony
capitalism. It is not a mere platitude. This is an imperative, all the
more because there are at least half a dozen senior Cabinet Ministers
who are known for their proximity to this or that industrial house, and
who at times find it difficult to resolve the conflict between their
oath of office and their unhealthy ties with these super-affluent
gentlemen. It is this soft corner for a tainted corporate crowd that has
fed the perception of collusion and contributed to the alienation of
the middle classes. The middle class quest for lawful governance cannot
be satisfied without bringing the so-called economic entrepreneurs
within the ambit of the law.
Thirdly, Mr. Chidambaram has an obligation to use the budget to signal
that the democratic system has the will and the stamina to roll back the
corporate offensive in running this country’s national priorities and
its collective affairs. No doubt, recovery of the Indian Growth Story is
a national imperative; no doubt, the global economic slowdown has
complicated this recovery; and, no doubt, “animal spirits” need to be
unleashed. Yet, it should be unacceptable to liberal and sensitive
voices that the national narrative has simply been hijacked by the
presumed need to appease market sentiment, that too at the expense of
democratic values. As a centrist party, the Congress in particular has
to be always cognisant of the larger political economy of pain and
deprivation. A democratic government cannot act as if it has no option
but to behave like a hostage to the manipulators of the market
sentiment.
Striking an equilibrium
Above all, the state-market equilibrium needs to be reworked in morally
defensible terms. Even within the framework of a liberal economy, it is
the obligation of the public authority to ensure that the relationship
between the corporate and the citizen is a balanced, fair and two-way
affair.
It is the task of democratic governance to see to it that the citizen as
a consumer gets a sense of fairness, and is not being helplessly taken
for a ride by large corporate organisations every time he or she makes a
commercial transaction. Many business leaders in India think they have
arrived, and that they neither need nor care for the “political crowd”
and its democratic obligations. In particular, the business leaders are
prone to believe that they are entitled to chafe at any suggestion of
lawful restraint on their greed and profits. On the contrary, there is
more than a hint of a threat: if elements of the policy regime are not
arranged to the satisfaction of corporate interests, “they” will take
their investments out of India to friendlier markets. This attitude has
already produced unhappy economic and political aberrations.
The larger democratic arrangement has lost its moral lustre and the
political and constitutional system has incurred a debilitating
legitimacy deficit partly because there remains a perception of
collusion between the public authority and the corporate practitioners
of unethical practices. Recovery of the lost moral sufficiency of the
economy can no longer be postponed.
(Harish Khare is a veteran commentator and political analyst, and former media adviser to Prime Minister Manmohan Singh)
