With the global economy continuing in recession and the monsoon playing truant, the Congress-led United Progressive Alliance, UPA, government perforce has had to return to the aam admi (common man) theme. This is evident from the Union Budget presented by Finance Minister Pranab Mukherjee in the Lok Sabha last week. The Government, of course, has made the mandated references to economic reforms, but the major thrust of the first budget of UPA-II is to protect the common man from the effects of the economic downturn.
The intentions of the government are clear from the emphasis on food security, expansion of the rural employment guarantee scheme, extension of the time limit for paying back agricultural loans and the lack of any clear cut roadmap for disinvestment and for aligning prices of petroleum products with international crude oil prices. It is clear that disinvestment and economic reforms will take a back seat in the government’s agenda at least in the coming couple of years, or till there are signs of reversal of the international economic downturn.
The return to welfarism grows from the Congress realisation that welfare steps taken by the Manmohan Singh government had a lot to do with the coalition’s return to power in this year’s general elections. While economists were apprehensive about the impact of the funding of the National Rural Employment Guarantee Act on the economy, in actual practice, it worked wonders for the rural economy, apart from buoying up the political fortunes of the Congress.
The government has been helped in sticking to the welfare path by the continuing world financial crisis. At a time when some of the biggest private banks and insurance companies in the United States and other Western countries have downed their shutters, it would have made little sense for India to open its doors to such institutions. Finance Minister Pranab Mukherjee noted in his budget speech that India’s balanced approach had left the country’s banking and financial sector virtually unaffected by the crisis in the world’s financial markets.
While Prime Minister Manmohan Singh has said that the Government is committed to raising disinvestment, primarily through the public-private partnership route, there would be no giving up of the process of inclusive growth. It is also apparent that even though the Left is no longer in the picture, allies like the Trinamul Congress and the DMK would not take too kindly to any wholesale privatisation plan. They have already given expression to their misgivings on disinvesting government stake in public sector companies.
The Congress and the UPA’s return to the aam admi theme with a greater urgency also arises from the challenging external environment. In the immediate neighbourhood, Pakistan has acted against terrorist elements on its western border, but there are no signs that it will take similar action against groups mounting terrorist attacks on India from Pakistani soil. Pakistan President Asif Ali Zardari has admitted that most of the terrorist groups operating in his country initially got encouragement and sustenance from Islamabad. But he has been silent on curbing the activities of groups operating against India. Perhaps, he is powerless to take effective action against these groups as the real power in the country continues to be in the hands of the Army. On most crucial matters, it is the writ of the Army chief which runs and not that of the elected government.
There are no signs that Pakistan’s major backer, the United States realises the need for Pakistan to take effective action against all terrorist groups, not only those involved in terror activities on its western border and in Afghanistan. It is apparent that the United States would be happy if Pakistan acts against the terrorist elements, which are posing a challenge to allied forces in Afghanistan, and not bother about ending the terror strikes against India.
China’s overt and covert support for Pakistan is another worrisome phenomenon.
There are big internal security challenges also before the Manmohan Singh Government. Apart from the insurgency in the north east, and militants continuing their destabilization tactics in Jammu and Kashmir, the Maoists or Naxalites have emerged as a big challenge. There is need for tackling both the law and order and economic dimensions of the Naxalite menace in a comprehensive manner.
Creation of an inclusive society, which is the objective of catering to the requirements of the common man, is essential if UPA-II is to effectively meet the internal and external challenges faced by the country. India will be a force to reckon with in the comity of nations only if its economy remains strong and does not stagnate, despite the downturn at the world level.
