The Hindu Business Line : Now on to governance

BY COALITION STANDARDS, the latest exercise by Dr Manmohan Singh at ministry formation has been smooth. True, there is still the odd glitch as in the DMK ministers refusing to take charge of the portfolios officially allotted to them. But the new Government should be able to sort this out either by restoring the status quo ante or sweetening the existing situation by offering the DMK an additional ministerial berth or two. The size of the Cabinet as announced is still short of the constitutionally mandated ceiling on the number of ministerial posts.

The composition has thrown up the usual mix of the known and the unknown, reflecting the nature of coalition politics at the Centre. But the choice of Mr P. Chidambaram to head the Finance portfolio is particularly significant, not so much for his understanding of financial matters, which is considerable, but for the underlying strategic political calculation. The lot of the finance minister in a coalition arrangement is never comfortable. He has to reconcile the broad policy goals set by the leader of the Government with the institutional rigidities and fiscal constraints in the system. The outcome invariably is a set of policy reforms that are politically sensitive and whose implementation, hence, is certain to meet with stiff resistance, both within the Government and outside.

What ensues, then, is an expedient response in the form of a partial or total rollback of these policies, often at the instance of the prime minister. Since it is the finance minister who conceived of the proposal in the first place, it is inevitable that the public should see him as the villain of the piece. But the prime minister himself escapes with none of the blame sticking to him; on the contrary, he actually emerges with credit for having shown rare political statesmanship in securing the withdrawal of what are seen as anti-people proposals. It is not a particularly enjoyable prospect for a finance minister to withdraw proposals announced with great solemnity in the Budget, as both Dr Manmohan Singh and Mr Yashwant Sinha — having served as finance ministers, often in unstable coalition arrangements — know only too well. But the burden placed on Mr Chidambaram is all the greater as he does not even belong to the Congress party; he still, after all, heads a breakaway faction of the Congress party in Tamil Nadu.

The nitty-gritty of ministry making is now behind this Government. But the larger task of governance is before it. A number of challenges confront it. A decision on whether to hike the prices of petroleum products is one such. On the one hand, it would do no credit to the Government's reformist credentials if it does not allow petroleum companies to raise prices in the face of a sharp rise in crude prices. At the same time, any hike in prices, if it is across the entire product spectrum, would hurt some sections of public hard. And not raising prices across the board would set off fresh distortions in the consumption pattern. Compounding all this is the phenomenon of the Government having received a windfall in the form of higher Customs duty collections from the flare-up in global oil prices in recent times. An imaginative solution containing all these ingredients is the first test this Government faces. Indeed, this may well set the tone for a public assessment of its capacity to handle problems that may arise in the future.