Opinion
-
Editorials
Politics & public finance
THE TAMIL NADU Chief Minister, Mr. O. Paneerselvam's announcement of a partial rollback of the recent price hikes shows the sharp conflict between politics and economics. The decision to reduce the price hikes should be seen against the twin backdrop of attempts to shore up the State's finances and the pressure exerted by political parties opposed to reforms. That the revenue expected from the price hike, then estimated in the range of Rs. 3,000 crores, will now be reduced is a matter that should engage the attention of fiscal authorities. While the hikes were necessitated, and explained, by the sliding economic health of the State, the partial rollback comes as a political sweetener. In both its timing - on the eve of a general strike called by political parties - and the sections selected for relief - for instance, the Public Distribution System, which caters to the needs of the large population base of low-income voters - the decision reflects the over-riding of economics by politics. While, in the immediate sense, this decision could take some wind out of the sails of the political parties that have called for the strike, the central issue of the need for financial correction will remain. At the level of decision-making by Governments, the hike and the subsequent partial rollback are indicative of the standard strategy that has been a part of the practice of politics.
This recent exercise in Tamil Nadu carries lessons for a cross-section of the country's society: the policy-makers, the political parties and, more important, the common man; the serving of whose interest must be the ultimate end of both politics and economics. At the level of decision-making, there is a need to resort to greater discussion and transparency if hard economic decisions are to be given effect to. The steep hikes and the subsequent revisions made by the Tamil Nadu Government could have gained in credibility if the people of the State were taken into confidence on the present malaise and the extent to which the upward revision of prices would have helped the situation. Such an exercise is imperative, given the conceptual shift that is taking place in the nation's economy: the slow, but steady redefining of the role of the state as an economic player from that of a provider of goods and services, invariably at less than market prices, to that of a facilitator and regulator.
This conceptual shift would mean preparing the nation's mindset for a new system of economic governance. Among the several hurdles to reform, the most insurmountable has been the mindset of the Indian people that has been nurtured by a system that aspired to be a welfare state. The consequent inequities and fiscal deviations, which have only resulted in several distortions of the market-intervention mechanism, now seek corrections. For political parties, it is now time to coalesce around ideological lines, at least when it comes to economic policies. Opposition to economic reforms on ideological grounds is one thing; it is entirely another to thwart the course of reforms for narrow and immediate political gains. While there is now a broad understanding, even a grudging acceptance, on the need for the reforms process, the country's political groupings should have the courage of their convictions to see this process through. This is not to say that all parties, left, right or centre, should accept the reforms process in toto; on the contrary, the task is that of presenting a well-reasoned and measured political response, taking into consideration the short-term sensitivities and the long-term consequences of political decisions relating to economic restructuring. Much of the success of the economic revitalisation of India will depend on how this process is handled.
Send this article to Friends by
E-Mail
Opinion
|
