July 14, 2020
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Clinging To Populism

Subsidised rice and prohibition get a reprieve, but for how long?

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Clinging To Populism
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WHEN Andhra Pradesh Chief Minister Chandrababu Naidu hurriedly convened a special assembly session this fortnight to release a white paper on the state's financial situation, conventional wisdom was that the 11-month-old Telugu Desam Government would own up to its mistake of making false promises to ride back to power, and roll back the populist schemes. Pubs and clubs were getting all set to reopen their bars.

But Naidu sprung a surprise. "We are wedded to the implementation of all our electoral promises. There is no question of going back," he announced to thunderous applause from the treasury benches. He then did a double take: he said the white paper had been released because of the World Bank and announced a hike in the power tariff to the agricultural sector and an increase in the price of subsidised rice.

Critics and rivals were left stunned. The state had lost Rs 2,900 crore because of the Rs 2 per kg rice scheme and total prohibition that had been the late N.T. Rama Rao's election vow in 1994. Another Rs 500 crore had gone down the drain due to power subsidies to farmers. The fiscal situation was so tight that Naidu himself had admitted that 40 lakh government employees may have to go without their salaries. A roll-back seemed imminent.

So what changed the script? Naidu admitted that the World Bank had turned down the state's request for funding the AP III Project (irrigation) unless the economy showed signs of improvement. The Bank had insisted on a water cess hike, which would help improve the state's repaying capacity, to consider a Rs 3,000-4,000 crore aid to the state electricity board. The condition was that it should ensure the minimum return of three per cent on the investment.

That took the wind out of the Opposition's sails. Naidu then declared that to tide over the fiscal crisis, his government was considering a hike in the water cess and taxes on other commodities in the coming state budget. Rumour has it that Naidu is considering a proposal of his Left partners to regularise the illegal encroachments on government land in major towns, which could fetch the government around Rs 5,000 crore.

Thus, the machiavellian chief minister had turned the tables. When the TDP made the promises two years ago, neither NTR nor Naidu could explain how the party, if voted to power, would offset the financial burden, except to say they knew how to do it. But Naidu was left carrying the can after his successful coup against NTR last September. He did away with the health permits soon after taking charge. But it wasn't enough.

The Congress turned down Naidu's invitation for suggestions on how to improve the state's economy. The ruling party's allies did not make things any easier. The Left parties opposed the government's attempt to find an alibi to dilute the drylaw and "re-examine" the rice scheme. The BJP, although not a force to reckon with, too talked of extending a helping hand to the agitating women's organisation if there was any deviation from the ruling party's electoral commitments.

Caught between the proverbial devil and the deep sea, Naidu was forced to convene a special assembly session to elicit the Opposition's views on the floor of the House, rather than in all-party meetings outside. The majority of the speakers at the special session opposed any move by the government to dilute the schemes. However, they expressed their support in convincing the farming community if the government desired to jack up power tariff.

As media concerns about the state's brittle fiscal condition grew louder, the hopes of those who had pumped in crores in the liquor business soared. The major clubs were busy giving final touches for reopening with the fond hope that the D-day of lifting prohibition was fast approaching. But Naidu had other ideas.

A majority of the ruling party MLAs feel the dry law needs to be given some more time, although many apprehend that Naidu may take up the subject at the July 23 cabinet meeting. But a decision in favour of tipplers is unlikely. Because the survival of his government, despite its numerical strength in the assembly, depends much on the political events at the Centre. Any hasty move now may jeopardise Naidu's political ambitions.

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