Shekhar Gupta:Caught in a political trap

Budget 2017-18 reaffirms our evolving understanding of the Narendra Modi-Amit Shah style of governance, which is pure politics, with economics no more than garnish. They came to power in 2014 promising reform, growth, jobs, minimum government.

Well in their third year now, none of the first three has been realised. And the fourth, has moved in the opposite direction. There is an expansion in the size of the government. Government and its directorates and regulators, public sector units, new state-owned Special Purpose Vehicles are now the biggest customers in the commercial space market in Delhi as the sarkari bhawans have run out of space. 

Go for a stroll through the corridors of Hotel Ashok, the emperor of our public sector white elephants, instead of being sold out and put to good use, is slowly becoming another "bhawan" with many new government offices moving there, including Delhi-Mumbai Industrial Corridor (DMIC) and one of the Justice Lodha committees (no, not the one on cricket).

One Budget is too little to base such an assessment on. But three, as journalism teachers like to say, is a straight line. The trajectory of political economy post-2014 is evident in the three Budgets by this government. The first, if anything, offered the most for entrepreneurship and job creation. But just a couple of electoral setbacks, and that "suit-boot ki sarkar" remark by Congress's Rahul Gandhi made the political leadership lose its nerve, and change direction. 

Can there be a better example of this than the Modi government's continuing paeans to MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) and increased allocations to it? Not long ago, he had called it an example of Congress failure of six decades to provide our poor basic living wages, and rightly so. People of India listened enthusiastically to him, and voted him to power. 

Third year into power, he is only expanding its scope and allocation, albeit with some administrative reforms.

There is a definite shyness from being seen to be doing anything for entrepreneurial India and not just because they wear suits and boots. It is, in a way, sound politics. Businessmen are too few to influence electoral outcomes. You can encourage them to invest more (which they have forgotten to do since 2010) and hope that it will create growth and jobs. But that involves too long-term a view of life in politics. What's the point of doing something, the benefits of which will become apparent in the term of the next Parliament, and maybe a different government. 

P V Narasimha Rao and Atal Bihari Vajpayee ushered in massive reforms, and lost elections. Benefit was reaped by governments that succeeded them, most recently by UPA (United Progressive Alliance) in 2004. So why take the hard steps today, seem pro-rich and be punished for it in this life, hoping for gains in the second life, which the voter may not give me.

It is safer, therefore, to sound pro-poor, do what you can for her, and at the same time, do on the sly anything you can to help entrepreneurship and growth. The late Sitaram Kesri had described this phenomenon very colourfully to me after returning from a visit to China: "These Chinese communists are like Delhi's bus drivers. They signal left, but turn right."

The difference is, they still did not have to go out looking for votes and work on five-year deadlines. So while the Communist Party guaranteed them permanent power, their people were happily complicit in this Left-Right facade. This is the political limitation, and compulsion that Modinomics now displays in ample measure. The biggest plus, and saving grace, I would say, is that finance minister Arun Jaitley has committed to strict fiscal discipline, instead of succumbing to tax/borrow or print and spend populism. But pressure for that will be tougher to resist next year.