To And From The Brink
Chandrababu Naidus calculation was that by supporting the United Front government formed after the general elections last year, he would be able to gather the harvest in the form of budgetary assistance. But the cyclone of September taught him the lesson his father-in-law had had to learn the previous year: the Centre, even under a United Front government, was not a cornucopia for bankrupt state governments to dip into. Naidu took the lesson hard; but the prime minister is so indebted to so many political creditors that he simply cannot afford to repay his debts to any of them, lest the rest should ask for the same favour.
So instead, Ashok Gajapati Raju, the AP finance minister, called in the World Bank. It did not give him any money. But it wrote a Country Economic Memorandum for Andhra almost as long as its CEM for India. It gave the simple advice: that instead of subsidising consumption or banning it, AP should invest in infrastructure and capacity-building social services. The first outcome of this excellent advice was that the AP government raised the price of PDS rice from Rs 2 to Rs 3.50. The next, which is likely to be announced by the end of the month, will be the repeal of prohibition.
As Andhra returns from the brink, Punjab begins its trek towards it. Back in power after 18 years, chief minister Prakash Singh Badal is on cloud nine. In joyous spirit he has promised a dowry of Rs 5,100 to each scheduled caste girl getting married. He has made canal water free, as well as electricity for tubewells. He has promised to abolish octroi. To some extent he is only carrying out the promises made by his predecessor, Rajinder Kaur Bhattal. It may also be argued that the financial loss from free irrigation and power will be small. Octroi is an undesirable tax on movement of goods. Badal has not carried out Bhattals promise of introducing prohibition. But this only means that he has not been half as foolish as he could have been. The plain fact is that Punjab, as it slowly emerges from the economic catastrophe wrought by terrorism, needs growth above all else, and Badal has done nothing to spur growth. After liberalisation, the baton of growth has passed to the maritime states of western India:
Maharashtra, Gujarat and Karnataka are attracting most of the investment. Following their example, Rajasthan has greatly improved its administration and incentive structure. Punjab needs to join this race, but Badal gives no sign that he is aware of this imperative. Under Congress rule, Punjab lived on handouts from Manmohan Singh. Those days of central largesse are over, and this reality will soon crowd in on the government of Punjab. It is a pity that Badal is unprepared for it.