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Friday
Nov 24 2000
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0157 hrs IST
1527 EST
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Liberaliser Babu or populist Naidu?
Our Political Bureau
NEW DELHI
EVEN as he let his flock of MPs unleash an offensive against the friendly Union government over its decision to rationalise subsidies in Parliament, Andhra Pradesh chief minister Chandrababu Naidu was at a World Bank summit here lecturing on the need to accelerate the pace of reforms and the benefits of harsh decisions for the country in the long run.
In what could have been music to the ears of reformers and reassuring for the prime minister — had he refrained from fiscally tormenting Vajpayee at regular intervals — liberaliser Babu said the reflexes of the government should not be governed by short-term gains, but long-term advantages.
He said though ``it (liberalisation initiatives) may be painful to begin with, it will be rewarding in the long run’’.
But the response of his party to the Centre’s recent initiatives to reform the oil economy tells another story. The pro-reforms noises are reserved just for seminars and the political costs involved in the decision will take precedence over economic rationale.
Naidu, who put the reforms foot forward at the World Bank summit, said it was the only route to generate employment and income generation. ``Since the introduction of reforms in 1992, the rate of economic growth has been steadily increasing and this has a positive impact on employment and income generation’’.
Quoting Machiavelli, Naidu said, "A reformer has enemies in all those who profit by the old order and only lukewarm defenders in all those who profit by the new’’. Ironically, this may be Vajpayee’s sentiment when he confronts demands from his allies including Naidu.
Although he is yet to pledge his total support for the reforms process in any govenment fora, Naidu said at the Bank summit that he was all for a radical outlook.
``Governance in the 21st century requires radical thinking about the role of governance, reduction in bureaucracy, increased risk taking, technological change and increased public private partnership,’’ Naidu said.
It is expansive rhetoric when one looks at Naidu’s record. He has been in the forefront of many demands — for instance, special dispensations notably subsidies for various interest groups — that are out of sync with liberalisation.
He does not wants to retrench surplus labour, close unviable factories or reform public sector companies or lift trade controls on agriculture. His opposition to the privatisation of the Vizag steel plant is a case in point.
On the expenditure front, Andhra Pradesh’s ratio of non-development spending to aggregate disbursements incidentally rose from 25.7 to 29.1 percent in the past four years. This represents a considerable degree of wastefulness, even if it is lower than the average for all the states taken together.
That apart, AP also has a track record of increased subsidies and poorly targeted welfare programmes. Explicit and implicit subsidies — power and food primarily — account for a seven per cent of AP’s gross state domestic product while salaries and pensions consume up to 50 per cent of total state revenue.
They have marginalised outlays on more productive investments in infrastructure, social sectors, or capital maintenance.
But at the Bank summit, where Naidu was a hot favourite, there were no sceptical voices. And he received vigorous applause.
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