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Behind the budget
July, 16th 2009

In 1994, when the Congress was routed by the TDP in the assembly elections in Andhra Pradesh, which happened to be then Prime Minister P V Narasimha Raos home state, the knives were out for Raoand his then finance
 minister Manmohan Singh in the Congress Working Committee. Many expressed their dissatisfaction with economic reforms put in place by the Rao and Singh duo, arguing that they had failed to trickle down to the poor or yield political dividends for the party.

It was Pranab Mukherjee, deputy chairman of the Planning Commission, at the time who had struck a balancing note, articulating the need to give economic reforms a human face, and Rao who talked about walking the middle path.

In 2009, this is just what Sonia Gandhi would like Pranab to do. The political grapevine has it that when she asked him which ministry he wanted, he opted for finance. Pranab has known, through experience, that he would not be given home (he had hoped for it in 2004) and Sonia herself wanted him to head the finance ministry.

In 1991 also, Pranab had coveted finance but was not given the ministry when Narasimha Rao took over. With the collapse of the Soviet Union and Indias balance of payments crisis, Rao had preferred Manmohan Singh to give suitable signals to the international community.

Normally, governments plump for populist budgets in the last year of their term, or at best during the last two years. It does not normally happen in the first year, but Pranabs budget is as political as it could get.

It goes without saying that the budget is more than an exercise in revenue and expenditure and contains the vision of the government. This years budget was widely criticised for being lacklustre without any big bang announcements. The corporates were disappointed and the Sensex tanked by almost 900 points.

And yet, there was nothing wishy-washy about the underlying message of the budget, as Pranab made suitable noises about redeeming the promises that the Congress had made during its campaign.

Given the economic downturn, the FM could have adopted a conservative approach and cut down on schemes and money spending. But he chose instead to take a calculated risk, allowing the fiscal deficit to grow, in the hope of increasing the purchasing power of people and provide a stimulus to the economy. 

The budget carries the stamp of the finance minister and it cannot but have the PMs approval. Having said that, if a distinction were to be made between Singh and Pranab, the budget had the finance ministers imprimatur, not Singhs. Left to himself, the PM may have a preferred a clear cut announcement on disinvestment, now that the Left is not breathing down his neck, and taken steps towards reforms in the banking, insurance and pension sectors.

But Pranab Mukherjee has steered clear of this in the budget though this does not prevent the government from taking these steps later. It was as if the FM wanted to make a deliberate point through his budget. He would not have done this, unless he knew he had Team Congress (read Sonia and Rahul Gandhi) backing.

The budget goes on to enhance the outlay for NREGS, which was a factor in Congress victory, by a whopping 144 per cent; Bharat Nirman Programme, covering six infrastructure projects, by 45 per cent. It is another matter that almost one third of last years outlay on NREGS was un-utilised and the programme has leaks that need to be plugged, but the political signals were clear the Congress is for the poor, for the farmer, for the aam aadmi.

Sonia Gandhis letter to the prime minister recently, on the need to bring in food security legislation, underscored this. There had been dissenting murmurs in the government that food security would be tantamount to giving doles. Sonia could have picked up the phone and called the PM or mentioned it to him at a meeting of the core group. By writing a note, which made its way to the media, she was specially making a point of the partys commitment to it.

Pranabs announcement that the government will enact a Food Security Bill, in deference to the Congress poll promise of giving 25 kgs of grain at Rs 3 a kg, is of the same piece. It is another matter that the Bill is likely to take a year or more to be put in place and may be referred to a standing committee. It is also not clear whether the Antyodaya Anna Yojana for 2.5 crore destitute, providing 35 kgs of grain at Rs 2 per kg for wheat and Rs 3 per kg for rice, and also the scheme for four crore BPL families, giving them 35 kg per month would continue or come under the food security law umbrella. In which case, the amount allocated for BPL families may be reduced from 35 kgs to 25 kgs. Those are the details to work out, but again, it was more the signal that mattered.

Mandate 2009 was only the semi final. The budget showed that the preparation for the final has begun. Everyone in the Congress is clear that Rahul Gandhi will take over as PM sometime in the future. There are no longer any ifs and buts being voiced about him.

The party and Rahul Gandhi is preparing to go for the bulls eye, and that is to win Uttar Pradesh for the Congress in May 2012. If that happens, there may be a clamour for him to take over as PM and lead the party into the next election in 2014. Some believe that Manmohan Singh may then be made the next President of India.

Rahul himself has shown no haste in taking over and the fact that he did not accept a ministerial berth has gone down well publicly, particularly as there was speculation that if the Congress won over 200 seats, Sonia or Rahul might take over.

The Congress is trying to put together its old rainbow alliance made up of Muslims (who are gravitating back to the party), upper castes (who too are looking at the Congress with renewed interest and this became evident in the Lok Sabha polls in UP) and the Dalits (whom the Congress is going all out to woo, much to the worry of BSP leader Mayawati). The inclusion of 10 Dalits in the Manmohan ministry and the elevation of Meira Kumar as the Lok Sabha Speaker were straws in the wind.

So also were announcements by Pranab in the budget, of a new scheme, the Pradhan Mantri Adarsh Gram Yojana (PMAGY) to be launched this year on a pilot basis, geared to develop villages which have more than 50 per cent Scheduled Caste residents. And also the National Mission for Female Literacy and the National Rural Livelihood Mission which will focus specially on the SCs, STs and minorities.

During UPA I, the Congress was more reactive than proactive in its approach. This time the party is moving politically from day one and the budget is one nugget in that gameplan.

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