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PC's Pet Minotaur

The UPA's first real budget is half human face, half powerhouse economics

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PC's Pet Minotaur
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If the electoral verdict of 2004 gave a thumbs down to the BJP's 'India Shining' project, the UPA government's first real budget attempts—at least in intent and tone, if not in content—to restore the balance, and address those left out of the magic circle. In his budget speech this year, Union finance minister P. Chidambaram acknowledges this fact: "It was...a vote in favour of a new leadership; a new government; new policies; and a new focus on the common man who is at the centre of all politics and governance."

But, if the people's mandate has been reflected in the budget, it is not merely because the UPA's reform-friendly managers have heeded the message. The composition of the UPA and its allies, particularly the presence of the Left parties—and the clout of their 62 MPs in the Lok Sabha—has ensured a visible change in direction. As a senior PMO official says, "As much attention has been given to sharing the cake equitably as has been given to enlarging the size of the cake."

Thus, many promises made in the common minimum programme, the Left's current Bible, in agriculture, rural infrastructure, employment, health and education were sought to be realised in the budget, even as the FM decided to postpone contentious big reforms issues such as labour reforms, disinvestment, FDI etc.

Conscious that the support of the Left parties—who are not represented in the Union cabinet—is crucial for the UPA government's survival, PM Manmohan Singh and the FM, along with UPA chairperson Sonia Gandhi and others, met top Left leaders over breakfast on February 24, four days before the budget. After the meeting, CPI(M) politburo member Sitaram Yechury said, "The thrust of reforms must shift towards people's welfare rather than the capitalist's profit and this shift, we hope, will be reflected in the budget." The meeting was a follow-up to the 12-point wish-list submitted by the Left to the PM on February 1.

The Left tilt in the budget can be seen, for instance, in the announcement of 'Bharat Nirman', touted as a six-pronged business plan for rural infrastructure development in the areas of irrigation, housing, electricity and telephones etc. Or in the announcement of the National Rural Employment Guarantee Scheme which, once legislated, will make rural employment a right and incorporate the current food-for-work programme. That's the politics, that's part of the government's equity agenda.

Chidambaram has managed to marry rhetoric politics with economic realities. Bharat Nirman, another PMO official revealed, is nothing new. It is just the "branding" and "banding together" of present schemes under one umbrella. The budget talked about "additional 60 lakh houses for the poor", but it's actually the Indira Aawas Yojana, mentioned in the budget, that promised 15 lakh houses in 2005-06, or 60 lakh houses in four years.

Similarly, the existing food-for-work programme differs from the promised NREGs only on one point: the latter will make employment for the rural poor a right, but will still cover the poorest 150 districts. Its allocation is only Rs 11,000 crore against the Rs 20,000 crore the Left had demanded. The NREGs also means the phasing out of another existing employment scheme, the Sampoorna Gramin Rozgaar Yojana.

The current budget has slashed sgry's allocation from Rs 4,050 crore to Rs 3,600 crore, the idea being that it will only cover those districts that will be not be under the proposed NREGs and, by implication, the number of districts it covers will shrink as the NREGs cover grows. Union rural development minister and RJD member Raghuvansh Prasad Singh has already expressed his unhappiness with this "jugglery" to the PM and FM. As CPI(M) MP Mohammad Salim puts it, "There is an acknowledgement of the CMP, but the economic statement fails to translate that fully."

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