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ShareThe union budget, due early next week, is expected to break some new ground. In the first year after an election, the government has a greater leeway to do the things it really wants to. Decisions can be made without the fear of voters throwing you out soon.
Typically, in the first two years of a term, governments have the freedom to think of a road map without an eye on the vote. The last two years of a five-year tenure always throw up decisions that are either not made at all -- for fear of losing support -- or made to win more votes.
The example of Manmohan Singh, when he started out as a finance minister, is a case in point. The process of liberalisation he began under Narasimha Rao would not have been possible if he had waited a year, let alone two, instead of using an economic difficulty -- the balance of payment crisis -- to take a route that was considered pretty radical then. Two years after starting on that course, he had to slow down because the political establishment had an eye on the next election.
You may argue that policy-making in the interest of the country should be completely insulated from such considerations. Unfortunately, those who fight elections have equally pressing reasons to moderate such efforts because, as far as they are concerned, you need to get elected in the first place to be able to decide on policy.
Because this is the first year of the new government and because the prime minister seems keen to move on to the next level of reforms, although he has not specifically said so in so many words, the expectations are really high on two fronts.
First, some substantial reforms in the social sector, which would make delivery of subsidies and support to the poor and deserving more direct and meaningful. Second, expanding the scope of reforms and liberalisation so that the GDP grows consistently, much more than 8 per cent annually.
Over the past few days, experts have suggested how best he can do that. There is some expectation of big-ticket spending to boost the economy, particularly the rural economy; a national food guarantee act; more money for Bharat Nirman and so on. By now, Pranab Mukherjee would certainly have completed most of the budgetary exercise and speculation on what he is likely to do, therefore, is pointless.
However, a new element that may throw a spanner in the works is the prospect of an imminent drought. It is a prospect that tends to put governments completely on the defensive. So, do not be surprised if the finance minister is forced to make substantial readjustments, on the fly, in managing the economy if the rains fail for another two weeks or so.
Currently, there is still hope that the monsoon will revive well in time for sowing operations. That is if you go by the forecasts which, as all of us know, have gone awry many times in the past. The deficit in rainfall is not confined to a small geography -- some part of the country or the other always has deficient rainfall -- but appears fairly extensive as of now.
If the rains fail (one hopes they won't), the problems confronting the government will be much more than the mere failure of the Kharif crop. While financially the government will have enough leeway to manage the situation, its impact can set back all plans as the first priority of the government will be to reduce misery at all costs.
In Karnataka, you can already see its impact. Most hydel and irrigation reservoirs are nearly empty, many almost touching the dead storage level. Unless there is a dramatic revival of the monsoon, you can be sure of a pretty tough year. You can be sure of power cuts for a long time if the reservoirs do not fill because, quite apart from lower generation within the state, the chances of surplus power available from other states are remote given the current grim picture.
The psychological and emotional impact of a drought on families dependent on agriculture can be truly devastating; much more than crop losses and indebtedness, much more than finding that you have no foreseeable income.
For those used to a regular flow of money through salaries, it is not easy to understand this. But try and imagine a situation when you are told by your company that, because of a slowdown or loss of a client or whatever, you have no job, and therefore no salary, from the next week and there is no hope of a job that brings in a salary for the next eight to 12 months.
Drought can be even more crippling than this on those whose life depends on, of all things, the variable temperature over the Pacific. The weather, you see, went global long before the economy did.
The writer is DNA's political consultant
