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Hobson's choice for UPA Govt

Hobson's choice for UPA Govt

Author: Swapan Dasgupta
Publication: The Pioneer
Date: February 17, 2007

The Opposition, it is often said, doesn't win elections; Governments lose them. In the past three months, the Opposition has done nothing spectacular to alter the terms of the political debate. Unlike, say the period from 1990 to 1994, when the BJP set the agenda through the Ram Janmabhoomi movement, the political battles of today are being fought on the agenda of the UPA Government. It was the Government's response to terrorism which created the first doubts about the UPA's competence. This was followed by the kerfuffle over reservations and the pro-minorities tilt of the administration. And now, finally, the issue has veered round to the UPA's management of the economy.

It is something of a paradox that the Government should be on the backfoot despite the country lurching forward with an enviable growth rate of between 8.5 and 9 per cent. Yet, there is something about a 6.5 per cent rate of inflation that instantly overshadows the soaring Sensex, the foreign acquisitions of Tata and Birla, and even Shilpa Shetty's triumph in Celebrity Big Brother. And when inflation translates into exorbitant prices of onions and higher mortgage payments for housing and personal loans you don't have to be either a rocket scientist or the BJP's court astrologer to know that the Government better watch out.

Inflation is a great political leveller. Whereas development and growth tend to be uneven, benefiting some sections more than others, price rise impacts everyone across the board-and none more than the vocal middle classes who determine the terms of political discourse.

The UPA has particular reason to be worried. The last occasion price rise soured the popular mood was in 1998. On that occasion, the astronomical price of onions was enough to divert popular attention from something as significant as the Pokhran-II blasts and secure the BJP's resounding defeat in Delhi, Madhya Pradesh and Rajasthan. The fact that for some nine years mehangai hasn't become a big talking point is significant. It implies that, unlike the 1960s and 1970s, people have got unaccustomed to treating high inflation as a natural part of life. As such, the political fallout of the current rise in living costs will be harder for the UPA Government to contain. The Government will have to answer charges that it was responsible for mismanaging an otherwise healthy economy.

The Government faces an acute crisis. To contain inflation it can, of course, raise borrowing costs and jeopardise the high growth in manufacturing and the services. However, this won't work unless there is a parallel move to curb unproductive Government expenditure. For the past two years, the UPA Government has sought to create an expensive network of sops and handouts which have diverted resources from infrastructure. The benefits of an entrepreneur-driven growth have been dissipated in Sonia Gandhi's acts of munificence. Will the Prime Minister now muster the courage to curb her Lady Bountiful act?

For the Congress it's a Hobson's choice: Cutting Government programmes involves emasculating non-productive schemes like the NREG but persisting with fiscal profligacy means being overwhelmed by popular anger at having to pay more for daily necessities. We are living in politically interesting times.

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