The Hindu Business Line : In the name of the <I>aam aadmi </I>

The Finance Minister has indicated that his principal concern has not been to hasten the growth process but to redistribute the results of the growth that has already taken place. This is where all the talk about the aam aadmi comes in.

At the very least, every Budget has two sides to it. The first is the purely economic aspect, that is, the Budget is viewed as a document that plans out fiscal policies on an annual basis with the one and only objective of promoting and strengthening new and existing growth impulses.

The second is the political aspect, which is that the objectives of the document are to attain purely political ends — always to strengthen the political position of the government of the day — even if while doing so the economic results may not always be beneficial to the nation's short and long-term growth prospects.

By his own admission, the Finance Minister, Mr P. Chidambaram, has indicated that his principal concern has not been to hasten the growth process by taking specific measures in the 2007-2008 Budget towards that end but to redistribute the results of the growth that has already taken place. In other words, this is where all the talk about the aam aadmi comes in.

`What is not there'

As the Finance Minister himself has said when asked about what the Budget contains for the common man: "Well, I can turn round and ask you what is not there in the Budget for the aam aadmi. If I offer one hundred thousand scholarships for children who might otherwise drop out, isn't that for the aam aadmi? If I provide for jobs for the physically challenged, social security to one crore families through an insurance scheme, seven million structures for ground-water recharge and restructure over a thousand ITIs, isn't that for the aam aadmi?"

Clearly, the Finance Minister, who belongs to the legal profession, has prepared his brief well, which is the least that can be expected of a reasonably good lawyer. The only thing that he missed out on in that answer of his was the addition of the phrase "like other Finance Ministers before me," which would have blurred the populist laurel he was trying to fit on his head.

His focus on the aam aadmi is nothing unusual and is certainly not unprecedented. In fact, the job of every government is to improve the living standards of the average citizen, which is precisely what he has attempted to do.

Political implication

But what is the political implication of that emphasis at this particular juncture, when the present Government has crossed its mid-term mark and, perhaps more importantly, elections to a couple of important State Assemblies are round the corner? One rejoinder could be that, if improving the condition of the aam aadmi is an integral part of any and every Union Budget, why should one single out the 2007-2008 exercise for a specific political angle?

Quite so. In fact, when asked whether, given the political climate, there was any pressure on him to spend more than what he has proposed, Mr Chidambaram countered: "No. Where is the pressure you are talking about? The Budget is made by the Finance Minister in close consultation with the Prime Minister — others only supply inputs. Inputs are always welcome, but why should you see that as pressure?"

`No' Pressure

The Finance Minister chooses not to see `inputs' as pressure, which is perfectly acceptable. But then he will not hesitate to agree that this may not be the way others view the subject. Indeed, it may be widely felt that the Finance Minister cannot act independently of his party, which in this case is the Congress Party that, by all accounts, has its back to the wall politically. In such circumstances, and in other situations as well, the party's political line would possibly be to direct the Budget at the aam aadmi, which is just what Mr Chidambaram has done faithfully, input or no input.

The question is: Does the economy per se deserve this treatment at this point of time? As someone said, the 2007-2008 Union Budget is an exercise in "wasted opportunity" for a further enhancement in the growth rate, which would probably have churned out more lasting benefits for the aam aadmi than what has in fact been attempted.

Indeed, the Finance Minister himself has extolled the growth-performance of the economy in his Budget Speech, the unstated implication being that the performance is already at a high pitch and nothing should be done to disrupt its further progress.

At the very beginning of his speech he said that the "biggest plus" of the mid-term report card of the UPA Government was the fact that the growth rate of GDP "has improved from 7.5 per cent in 2004-05 to 9 per cent (quick estimate) in 2005-06 and, according to advance estimate, to 9.2 per cent in 2006-07," adding, "The average growth rate in the three years of the UPA Government is, therefore, 8.6 per cent."

Considering the five-year Plan format, he said: "Thanks to this impressive performance, despite the poor start in 2002-03, the growth target set for the Tenth Plan of 8 per cent will be nearly achieved."

Mr Chidambaran hopes that the present pace of growth will continue unimpeded despite the fact that he has done nothing of note in his Budget to pep it up further. In his post-Budget press conference he said: "No extra burden has been put on the corporate sector. We have done nothing to hurt the growth story of Indian industry and services. The growth story is intact."

Focus on Farm

In his words, the focus in the coming year will be on agriculture not only because "about 115 million families are classified as farming families," but also because "a country with a large population has to be nearly self-sufficient in essential food items; otherwise supply constraints could upset macro-economic stability and growth prospects." If one is not mistaken, these statements have been true for the economy for as long as one can remember.

In Para 43 of the Budget Speech, he recalled Nehru's words: "Everything else can wait, but not agriculture." Curiously, among other people, Nehru's granddaughter-in-law, who is currently president of the Congress Party, feels the same way (witness her justified concern over the "anti-farmer" nature of Free Trade Agreements, conveyed in writing to the Prime Minister last year).

Lest unwelcome inferences are drawn from this identity, Mr Chidambaram will of course dismiss it as mere coincidence even though he may condescend to classify this particular `input' as being of a critical nature, which can be ignored only if one has politically suicidal proclivities.

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