Friday, September 14, 2012

Economic resolve or political posturing

I thought it only happened in Hindi movies. A man completely paralysed and handicapped for years, suddenly jumps on his feet and starts dancing around the trees. But you will be excused if you think you are seeing the same scene enact with UPA govt. Whether it is true (as media wants us to believe) or whether it is just a dream sequence will be known in next few days.

I won't go into pros and cons of the announcements made. Too many people doing it, many with their half baked knowledge. So I will steer clear of that orgy and try to look at politics of these steps or should I say announcements.

If we look at last few years, while the government has been under fire from industry on lack of reforms, it has always been in denial mode. Congress has smartly ignored and hid their internal differences and painted other parties or people as villians be it Left, Mamata, BJP or Pranabda. Things reached a stage where even RBI Governor had no qualms about hitting out at then FM Pranab Mukherjee. Then came the major reshuffle of key portfolios bringing the protege-mentor team of Subba Row and PC back in the economy play. Finance Minister badly needed Subba Row to cut rates while Subba Row spoke of cuttting rates only after government moved on reforms. Now with fuel price hike and other announcements, PC has made that first move. Expect Subba Row to latch on to this excuse to cut rates and make the government favourable among industrialists against. This despite the fact that inflation has risen and not reduced.

Isn't it surprising that Congress took such major decision without taking allies into confidence. Isn't the sudden bravery of the government very suspect? A government and a party which claims it let its ally loot the country because of coalition Dharma has suddenly turned disdainful towards the partners. Hard to digest, isn't it? The criticism of some of the steps have come from Digvijay Singh. What he says today, Rahul says tomorrow and Manmohan Singh has to do day after tomorrow.

The timing of the announcement is suspect too. On 14th Sept in the morning, SC took the government and indirectly the PM to the cleaners on Coalgate. And within few hours the announcement was made though cabinet had met the previous day. If the Congress wanted to divert attention from it's scams, it surely has succeeded as of now.

All these points are enough to make us believe that government is just posturing and not serious on reforms. My feel is that the next few steps will be:

Subba Row cutting rates. Banks have already cut rates on FD by .5 to 1 percent. This makes the government a darling of business again. A move aimed at increasing war chest for elections.
Then citing pressure from Congress and allies, government will roll back (fully or partially) the diesel price hike. This will be followed by go-slow on some announcements and total stop on other reforms.

Timidity has been this Government hallmark and I will be glad to be proven wrong if I refuse to accept that it has suddenly become brave. It is just a dream sequence we are seeing. The man (government) is still sitting on the wheelchair, immobile

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