Cheap popularity

I HAVE nothing against cheap popularity. On the contrary, I am all for it. Provided its pursuit does not corrupt you or deflect you from your chosen course. Provided it can make you popular today without the risk of a backlash tomorrow. And, of course, provided that this popularity can be got cheap. After all, that is the whole idea.

The case for cheap popularity becomes particularly compelling when the circumstances in which you are placed force you to take hard decisions. In the matter of economic reforms, for instance. For years and years now we have been living beyond our means. In their effort to make themselves popular at our cost, politicians have been freely spending large sums of money to indiscriminately cultivate this or that constituency. This has been one of the important reasons for the huge deficits we have been running over the years; and for the huge accumulation of debt that has resulted, the interest on which alone today eats up a major chunk of revenues; without leaving over very much for anything else.

But the running up of debt has not been the only way in which politicians have sought to beat the "budget constraint". Keen to do more than budgetary resources would allow, they were quick to tap into extra budgetary resources; like the resources of banks, and electricity boards. These organisations were quite literally bled to death as a result of being forced to pursue "social objectives" beyond sustainable limits. "Cross subsidisation" was the name of the game. Losses incurred on providing free or below cost services to the poor were to be made good, within the organisations themselves, by jacking up the charges levied on the rich, while severely diluting the quality of services rendered. So far was this carried, that we have pretty much killed the goose that laid golden eggs.

Mr. Yashwant Sinha is therefore to be commended for his resolve to take hard decisions. These are inescapable if we are to get ourselves out of the trap in which we today find ourselves. One of the things that he is sure to do is to force electricity boards to recover an ever increasing share of their costs. Apart from this, I do not know what particular package of measures the Finance Minister intends to unveil while presenting the Budget at the end of this month, but there is one thing that is certain. Costs will have to be borne today; benefits, if any, will accrue only tomorrow. Opposition parties are sure to attempt to cash in on this; they are sure to come forward to "defend" our interests. This is one of the things that makes the job of a reformer so hard.

Adding to the Finance Minister's worries on this count will be the fact that his squeeze will necessarily pressure lower income groups as well; indeed, many fear that the burden will fall almost wholly on them. This being the case, he would do well to try to offset this by simultaneously giving the poor a better deal elsewhere. Here and now, rather than in the indefinite future by way of prospective improvements in their employment prospects, which may or may not materialise.

This may sound nonsensical; to say that the outflow of resources should be increased at precisely the time when you are trying to contain it. But it is not so very absurd an idea. The critical thing to bear in mind is that resources channeled towards the poor cost us very much more than the benefits that actually accrue to them. One reason for this is the leakage of resources to the non-poor. But there are other important reasons as well, in particular the huge delivery costs that are incurred on an ongoing basis in, say, routing money to the poor through the banks, and the enormous excess burden that is caused due to the disruption of the smooth working of, say, the electricity boards. Thanks to these factors, it is quite possible to protect the interests of the poor, even while tidying up the economy.

To what extent Mr. Sinha will exploit these opportunities remains to be seen. But one thing is certain. It will not do to forget about trying to be popular merely because the "next elections are five years away". Popularity is urgently needed at a time when hard decisions are contemplated; provided it can be got cheap.

SUDHANSHU RANADE

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