CHIDAMBARAM SUCCEEDS IN PRESENTING A POPULIST BUDGET

Now what are its measures to say so?

The slowdown in the Economy and the fiscal credit crisis had not left much space for Chidambaram to maneuver or manipulate. He could not take risk to antagonize the international rating agencies or could not let the Economy slip to a junk status that would ultimately flatten the foreign investment in the country or would kill his name as finance minister.
At the same time, he was not in a position to delay or slow the fund-flow to the populist measures direct cash transfer of Food Security Bill.
So, he tried to maintain a balance between these two concerns. And whatever it does to him or his government’s electoral fortunes when the elections come, he looks to have succeeded at the moment in striking the balance, at the cost of hurting some segments of the population to appease the others.
The Union Budget needed to address the segments of the population that the Congress party felt should be targeted as the vote bank; the segment that has voted for the Congress party; the segment that the Congress party thinks would respond to the ‘youth imagery’ of its prime-minister in waiting, Rahul Gandhi.
The segments are:
  • Youth, women and minorities to name the cross-spectrum groups from different community and caste affiliations
  • The poor – farmers, the traditional Congress party vote-bank from the cross spectrum section
  • The poor – the have-nots from the unorganized sector – this too, again from the cross spectrum section
Some of the most talked about related budgetary proposal targeting these population segments are:
  • The annual farm loan has been revised by 22 per cent to Rs. 7 lakh crore.
  • Planned expenditure on direct cash transfer has been pegged at Rs. 55,223 crore.
  • The Budget has put aside Rs. 10,000 crore for the Food Security Bill over and above the normal provision for food subsidy as Mr. Chidambaram said. It is nothing when we see the Food Security Bill is expected to cost somewhere in the range of 1.8-2 lakh crore.
  • MNREGS has been given Rs. 33,000 crore.
  • Mid-day meal scheme has been given Rs. 13,215 crore.
  • Chidambaram’s Budget has provisioned Rs. 1000 crore for skill development of the youth (70 per cent of the voters in the country are under 35).
  • The Budget proposes to establish an all-women public sector bank and ‘Nirbhaya Fund’ (to honour the Delhi gangrape victim) for women safety.
  • The fund for ministry of minority affairs has been upped by 12 per cent at Rs. 3511 crore.
  • Like the Railway Budget, the Union Budget, too talked of creating significant number of jobs.
So good to ears of the voters – isn’t it? Let’s see how it translated into votes.
Like the Railway Budget, there are many provisions to fleece the every target segment that the Congress party has tried to make happy by the populist measures like the above but that needs a fine in-between the lines reading and time.
That reading and the time is a closed box for the UPA government at the moment. It may bring positives or negatives both. But the ‘Goings’ by the moment indicate more about the negatives.
The Union Budget talks about almost 16 per cent higher than expected expenditure and says the increased expenditure would be funded by increased earnings. Who cares at the moment that it would deter the RBI to take measures to reduce the inflation?
The Union Budget evinced mixed response. There was a divided house on supporting or slamming it – be it the economy experts or the industry honchos or the politicians.
But no one can say what the opinion of the masses is. That will only be visible in the outcome of the assembly elections and the Lok Sabha election.
©/IPR: Santosh Chaubey – https://santoshchaubey.wordpress.com/

POLITICIANS MAKE THE INDIAN RAILWAYS BLEED

A half-populist Railway Budget in the election year is the testimony to the survival crisis the Indian Railways is facing. Passenger fares were hiked by the back-door measures and many senseless but populist projects and plans (many of them unachievable) were announced. But the locomotive giant needs immediate and direct measures to become self-sustaining.

Yes, the priority at the moment is to become self-sustainable. Modernization has no scope for now.

Indian Railways is bleeding. It has not been able to do much after the British left the India. It could not gain much in terms of operational and commercial efficiency even in the heydays of the Indian Economy post-1991 that more than quadrupled the size of the Indian Economy.

Its story has been akin to the common man, the ‘aam aadmi’, a compromised and neglected entity in the making of the Indian Democracy – who has been subjected to a sluggish growth rate midst the chaos and chorus of the high-voltage growth of the Indian Economy.

And it is all due to the present political culture.

The ill-health of the Indian Railways is due to the political administration it has had. The biggest landowner of the country was forced to bleed by a decade of almost no passenger or freight rate hike. And the reasons were purely political, not social or economical, the ailing finances of the Indian Railways expose.

The fuel and energy prices have increased manifold in the same time-period. Then there are huge operational expenses incurred in maintaining such a behemoth that is the world’s seventh largest employer and certainly the largest in the country. Add to it the increasing pressure of extending the network and introducing modern facilities like high-speed trains and ramp-up of technology, from operational to commercial.

All this demands a healthy financial performance with consistent revenue generation and cash inflows. The Indian Railways has not been allowed this by its political administrators.

It has been manipulated by the politicians to work as an agency to draw electoral mileage. Nothing has been done to increase or strengthen the network but irrelevant new trains are announced in every Railway Budget. No feasibility studies are conducted before starting a new service. The only consideration is to give more and more goodies to the states belonging to ruling political party or the Railways Minister in case of a ruling coalition.

Fares have been consistently held up for political reasons to serve the political interests. The high share of the freight used to balance the loss here. But with changing times and better road infrastructure, the Indian Railways has lost that balancing edge. From controlling 80 per cent of the freight transportation once, it has come to a dismal 20 per cent of freight share now.

At the same time, the global fuel prices have increased manifold post-2000 putting the pressure on the government (which has always sought to wash its hands off) in absorbing and subsidizing the fuel and energy expenditure owing to the passenger transportation of the Indian Railways.

It has become imperative now (there is no option left) to link the rail fares with the deregulated fuel and varying energy prices. If, we as consumers, need to use the services, almost of us can pay easily. After all, no one travels by the train every other day.

The fuel prices deregulation, though insensitive, politically motivated and socially unacceptable, has been put into effect. So, we as passengers need to accept that. So, we as consumers need to accept the deregulated freight rates.

There is nothing wrong in charging rightfully for the services being provided, and the Indian Railways, anyways, is not at all a costly affair given its range of the different price-pointers.

But why not treat it rightfully then? Why not run it as an efficient outfit in the service of the nation? Why let it bleed by arresting its sources of income for a decade for silly political considerations?

Why make political differences between passenger fares and freight rates when it has to be a decision of economic wisdom and practical requirement?

Why play the game of perceptions for silly political gains?

Yes, it is all due to the present political culture. And this Railways Minister and the Railway Budget was no different either.

Mr. Bansal, like every other rail minister, burdened an already overcrowded rail network with 94 more trains. Already, the Indian Railways are notorious to run with horrible delays. To add to the misery, there were countless projects, plans and plants and concepts, certainly not achievable in the near future. They will follow the long list of delayed or just-on-paper rail projects.

It doesn’t need a Harvard economist to realize what the Indian Railways needs. It needs complete electrification. It needs doubling of lines across the whole network. It needs engines to ferry trains with greater numbers of coaches and not more trains. It needs a rationalize fare structure. It needs a proper land-management policy to commercially explore its land bank, largest in the country.

It needs a common rational thinking to begin with the process of much delayed Indian Railways reforms.

©/IPR: Santosh Chaubey – https://santoshchaubey.wordpress.com/

A MORE ‘IN-BETWEEN-THE-LINES’ RAILWAY BUDGET – THE WAY TO A POPULIST UNION BUDGET?

A more ‘in-between-the-lines’ rail budget only supports the notion that the Congress party is preparing for an early Lok Sabha election. Except politics of claims and counterclaims, there was nothing new in the maiden Railway Budget speech of Pawan Kumar Bansal.

After the recent hike in the passenger fares in January, no one was expecting yet another hike in the Lok Sabha election year.

But the government coffers, more than the ill-health of the Indian Railways, was on the radar of the makers of the Railway Budget 2013-14.

The UPA government needs billions in funds to fund its populist schemes to encash them in the upcoming general elections, which by the analysis of the political developments of the moment, are going to be held later this year.

(WHY, MORE THAN ANY OTHER PARTY, THE CONGRESS PARTY WOULD GO FOR A 2013 LOK SABHA ELECTION?)

http://severallyalone.blogspot.in/2013/02/why-more-than-any-other-party-congress.html

Indian Railways’ ill-financial health has been a matter of concern for sometime now and the sudden fare-hike in January was a well thought measure to address, at least, some elements of the financial decline.

The timing served two purposes in one go – financial and political. It gave the Indian Railways the much needed cushion of increased cash flows. It also saved the government from the protests of the political opposition if the hike was announced at the floor of the Parliament during the presentation of the Budget.

It also relieved the government as the increased cash flows would reduce the burden on the Union Budget 2013-14 that an ailing Indian Railways might have posed so that the government could spend more on its populist dole-outs.

But, mere increasing the passenger fares was not enough to address the issue. Indian Railways needs much more to improve and modernize its network and infrastructure. The whole world, and the obvious comparison with China’s large network of high-speed trains, is putting India in poor light.

But, when the primary concern was of survival, who was going to think of modernizing and competing at the level of most modern technological innovations in the rail transportation?

The need of survival asked for increased revenue or increased funding by the government. Now a government, hard-pressed for funds, and all out to collect funds to fund its populist measures in an election year, could not have afforded much.

The other way was increasing the sources of income. The only immediate option available was hiking the fares. But the present administrators of the Indian Railways with the outfit being the lifeline of the country directly affecting the life of almost every Indian, too, were not in a position to do so in an election year. That would sound too unpopulist. Isn’t it?

So, in order to sound populist and people-friendly, as well as to increase the options of revenue generation, the UPA government decided to take the back door.

Hiking passenger fares is a sensitive issue as it directly affects the consumers and may invite negative sentiments from the lower income groups – a gamble not to be taken in an election year.

The Indian politicians believe perceptions play a major role in the electoral battles. But, what if it is a do-or-die situation for the Indian Railways?

So, squeeze him (the common man/the voter) out indirectly. Let him be in the perception that the fares were not hiked again. As for the other price hikes, the UPA government believes (wrongly) that it would be able to sail over the troubled waters by launching its populist schemes.

By the time, the voter would come to realize these back-door games, the elections would already be over.

The Railway Budget has increased the ticket prices indirectly by increasing rates like reservation charges, Tatkal charges and fuel surcharges. As expected, the ‘sleeper class’ has been given the least hike, but the consumer here too, has been duped by the other indirect tariff hikes.

The real killer is the proposal to hike the freight charges as well as its linking with the fuel and energy price variations. So, be ready to pay more each time the diesel or power prices are raised.

Indian Railways, though has a relatively low share of freight, i.e., 20 per cent, around 32 per cent of the Kerosene, diesel and LPG is transported through the Railways.

As the fuel prices are now deregulated and market controlled, expect more of regular periodic hikes in prices of fuels and so of the dependent commodities, from foodgrains to consumer durables.

Periodic hike in the fuel prices would increase freight charges increasing prices of the commodities being transported through the Indian Railways. The increased rail freight rates would, in turn, further increase the fuel prices. That would, indeed, be a vicious circle for Manmohan’s ‘aam aadmi’.

But that is indirect and Mr. Bansal has followed one of his predecessors Lalu Yadav, who did many such back-door things, like Tatkal pricing or break-journey rules, to increase revenue figures, that ultimately, squeezed out the common passenger.

What Mr. Bansal has done goes one step ahead. He has not only squeezed the common passenger but has also pressed hard the common man, by introducing the measures that would not only increase the ticket prices, but would also cause price increases across the spectrum of commodities linked with fuel prices and rail transportation.

So, the Indian Railways would be able to manage better and the UPA government will have greater space to manipulate the resources towards the schemes like the direct transfer of cash subsidy or food security or farm debt waiver.

And don’t think much about many loud-mouth claims of new projects, new trains and new concepts – they are just written and spoken to be forgotten. There is no set deadline and timeline for their implementation. In fact, they are just used to decorate the dull and routine fallacies like this Railway Budget.

©/IPR: Santosh Chaubey – https://santoshchaubey.wordpress.com/

TO 2014: NARENDRA MODI VS RAHUL GANDHI – WHERE MODI SCORES

Midst the growing clamour in Bhartiya Janta Party of making Narendra Modi the prime-ministerial candidate for the 2014 general elections, he landed in Delhi yesterday. He met the prime-minister and addressed a jam-packed audience at the Sri Ram College of Commerce of Delhi University. Like his proven ability, he delivered a speech that had the audience glued.

And like any Modi movement, the hyperactive media went in frenzy. Modi was all across, painting every news website, inhabiting every news channel. Expect the printed word following the trend when the newspapers come to stands.

Predictably, the focal point was the ‘prospect and contention’ on Narendra Modi’s prime-ministerial candidature and obvious cropping-up of his comparison with Rahul Gandhi.

As the equations and the goings of the moment say, Narendra Modi is having the clear advantage when we project the elements for 2014. Almost every survey report declares him the most popular leader in the country and the most preferred choice as the next prime minister. And it is not without the elements of reason.

Rahul’s chances are fishy. He figures in every such report but Modi has been able to maintain and widen the gap.

So, what are the principle elements that place him ahead of Rahul Gandhi? I see three as the cardinal ones.(Sure, more can be added.)

POLITICAL CAREER – THE ROLE MODEL STUFF

Modi has risen from nowhere, from a family that belonged to the lower stratum of India’s multilayered social weaving. He began his political career as a nonentity, the office boy of the Rashtriya Swayamsevak Sangh (RSS). The journey to the political top has been gradually scaled up with hardwork, nothing like a fairytale. That makes Modi role model for millions in a rich country of poor people.

Rahul’s background is elitist. No matter how many night-outs at Dalit huts, he is not going to be able to change this perception. The skepticism only aggravates given Rahul’s short career in active politics that is absolutely short of any significant political and social achievement. Instead, Rahul has, in his account, social blunders like Kalawati, Maval and Bhatta Parsaul. Also, the country is still unaware of Rahul’s intellectual credentials. Rahul may be a political alternative given his Nehru-Gandhi lineage but everything else in his record-book scuttles his chances to be seen as a role model.

ELECTORAL PERFORMANCE

Modi has a proven political track record with three consecutive electoral victories. And mind you, these all have been convincing victories, routing not just the opposition parties, but also the factionalism in his own party fueled by big names including a former chief minister and influential community leader. Also, in last two elections, even the RSS worked anti to him.

Rahul has big electoral failures in his name since he started taking centrestage of the election campaigning for the Congress party. The most notable ones are Bihar and Uttar Pradesh. Some assembly victories that came to the Congress party cannot be accorded to Rahul’s stature.

Modi is high on confidence. Rahul must be in introspection mode if he has to do the damage control. Complacency is going to be big killer adding to the misery in an election where the Congress party’s prospects are already being written off.

KNOWING THE CONTEXT – THE EFFECTIVE OUTREACH

Modi is cunningly brilliant to exploit the words of others to his own advantage. He plays the victim card, impregnated with the religious sentiments, subtly well. He knows what to say and how to package his message keeping in mind the audience. He shows a craftsmanship of a corporate communicator here.

On the other hand, Rahul has failed again and again on this front. The emotional quotient that happened to the high point of his political speeches when he had begun his active politics career has become a worn-out and tired element of repetition, added and fueled by poor audience research and lost context. Now Rahul’s speeches attract attention more for their lack of depth and misplaced mode of delivery.

©/IPR: Santosh Chaubey – https://santoshchaubey.wordpress.com/