Popeye Gets His Spinach

Businessmen must be wondering what all this means for them, for they will have to live with two types of uncertainty: either the one caused by the Congress not allowing the UF government to function, especially in the matter of reforms; or the one resulting from a general election which once again returns an unclear verdict. But given the way things have panned out during the last year or so, they may have less cause for concern than they fear if Mr Kesri decides not to go for a general election immediately. This is because, given the precarious nature of their political existence, most politicians today are bothered only with the cruder side of state intervention, such as subsidies, administered prices, public sector jobs etc. Not for them the more sophisticated aspects of economic management, such as monetary policy, interest rates, ad hocs, tariff reform, convertibility etc. It is perhaps because of this that the government has been able to get on with the reform of monetary policy, trade policy, financial

 

sector reform etc while being stymied on fiscal policy reform. This means that, barring the less refined aspects of fiscal policy, things could continue in the right direction, albeit glacially, as long as someone like Manmohan Singh or P Chidambaram heads the finance ministry. It really does not matter from which party.

But if Mr Kesri decides to go for a general election, it will induce altogether greater turbulence in economic management. For one thing, a number of top officials are due to retire/move on. The heads of some other bodies, including a few regulatory ones, are also likely to change, for one reason or another. While these functionaries can be expected to show some residual sparks of initiative if the UF government continues, they will almost certainly down shutters if it becomes clear that Mr Kesri is bent on a general election. Even after the election, whichever party forms the government will take time in finding new persons to run these offices. All in all, therefore, businessmen must hope that Mr Kesri will be content to drive from the back seat, rather than try and take over the wheel himself.