Is the Congress pushing Finance Minister Pranab
Mukherjee into the Rashtrapati Bhavan because he is the best person with
a vast political experience and fit for this Number One constitutional
job? Or is it being done to get the North Block seat vacated since he
has messed the economy completely ?
Going by the official statement of the ruling coalition in nominating Pranabda, one should believe in the first proposition. But ever since this nomination, the Congress has been planting many news stories that Dr Rangarajan might be the new FM and a set of economic reforms are all set to give a new lift to the UPA Government’s sagging image and morale.
The focus on the presidential prospects has been shifting from Pranab Mukherjee to Sonia Gandhi’s political savvy in cutting Mamata Banerjee to size and achieving “greater coherence” within the UPA that has been talking in forked tongue for the last two years. Of course, for any government such an achievement of cutting some inconvenient people to size is good.
The repeated rollback of this Government has convinced most observers, including leading industrialists, that this is a government paralysed by its own lack of political courage. The buzz word in all analyses of India has been “policy paralysis”.
Mamata Banerjee was the public cause of this paralysis, for the Congress officially. Now we are told Pranab Mukherjee is no less. A leading business daily has, in fact, forecast that several measures, including an increase in diesel prices, approvals for more infrastructure projects, measures to boost capital inflows, pension reforms and reconsideration of the retrospective tax provisions of Pranab Mukherjee’s last budget, as the steps proposed soon after the UPA’s Presidential nominee vacates his office in North Block.
But right within 48 hours of the UPA announcing its presidential nomination have come two more stunning revelations. On June 18, one more international rating agency, Fitch, cut India’s credit rating outlook to negative. And RBI Governor D. Subba Rao brushed aside clamour of the industry to cut the interest rates and decide to maintain the status quo.
Both these measures are a slap in the face of the Government that has been assuring all and sundry over the last few days that India’s “fundamentals” are strong and growth rates would recover from the six per cent level upwards. Fitch is the second agency after S&P to downgrade India’s credit standing. Both have specifically quoted the diarchy in the governmental structure, with true power residing in theCongress President and the Prime Minister holding the baby, as one of the reasons for the downgrade.
In refusing to surrender to the clamour by industry and the Ministers for rate cut, the RBI has listed the inability of the Government to rein in the fiscal deficit and failure to manage the supply side. These together keep inflation expectations high and hence as a responsible central banker D Subba Rao would not cut the interest rates. Rao has even warned that further reduction in the policy interest rates at this juncture could exacerbate inflationary pressures instead of supporting growth.
In essence, the RBI itself is refusing to believe in the Government’s contention that good days are ahead. Anyone could read between the lines of the RBI’s assessment: persistence of overall inflation bothat the wholesale and retail levels, in the face of significant growth slowdown, points to serious supply bottlenecks and sticky inflation expectations, the central bank has concluded in keeping the interest rate at the present high level.
Some other straws in the wind aren’t giving the man destined to walk into the Rashtrapati Bhavan a happy reception either. His own colleague Veerappa Moily, the Minister for Company Affairs, has told a TV channel that there is need to have a relook at the retrospective tax provision made in the latest budget. He is worried about the “negative sentiments” that the retrospective tax application has created and wants a “relook to make the investment climate favourable”.
That is a soft way of telling his Finance Minister that the much- hyped retrospective tax is the stroke that has killed the goose that laid the golden eggs. Mohandas Pai, a former top honcho of Infosys, had no hesitation in admitting during a TV discussion that corporate India was “pleased” at seeing Pranab Mukherjee out of the North Block.
Corporate India has been telling everyone for several months that the retrospective tax and high interest rates have destroyed investor sentiments. Almost all the proposals for issuing IPOs have been withheld as investors are not responding; those who ventured soon found that the issues are flopping, including the Government’s own companies.
With all these negative sentiments crowding in about the economy’s management over the last three years, you just cannot dismiss the analysts’ prophecies that with Pranab Mukherjee’s expected to move into Rashtrapati Bhavan, his North Block seat will have enough room to change the economic climate.
In other words, the Congress wanted Mukherjee to move out to get that vacancy created. It is not a great secret that yet another 10 Janpath favourite in the Government, Commerce and Industry Minister Anand Sharma, has been very critical of the last budget of Pranab Mukherjee. So add two and two together and the sum total is more than four, even five.
That neither international rating agencies nor the country’s own central bank believe the promise in the budget that even after four months have passed that subsidy would be reduced to a level lower than two per cent of GDP and fiscal deficit to 5.1 per cent.
And with what face does our Prime Minister hold forth at the G-20 meeting in Mexico asking global leaders to manage their financial affairs better in the context of the Eurozone crisis when he cannot manage either inflation nor fiscal deficits in his own country?
It could just be that Mamata Banerjee was not far from truth when she claimed that Sonia Gandhi had permitted her to reveal the name of the Congress’s choice for the President’s post even before it was officially announced.
In politics truth is often read between the lines. And what better way to get several birds killed with one stone and get someone else to do your unpleasant job?
But the million dollar question is: should a failed finance minister be elevated to the office of President of the Republic?
Going by the official statement of the ruling coalition in nominating Pranabda, one should believe in the first proposition. But ever since this nomination, the Congress has been planting many news stories that Dr Rangarajan might be the new FM and a set of economic reforms are all set to give a new lift to the UPA Government’s sagging image and morale.
The focus on the presidential prospects has been shifting from Pranab Mukherjee to Sonia Gandhi’s political savvy in cutting Mamata Banerjee to size and achieving “greater coherence” within the UPA that has been talking in forked tongue for the last two years. Of course, for any government such an achievement of cutting some inconvenient people to size is good.
The repeated rollback of this Government has convinced most observers, including leading industrialists, that this is a government paralysed by its own lack of political courage. The buzz word in all analyses of India has been “policy paralysis”.
Mamata Banerjee was the public cause of this paralysis, for the Congress officially. Now we are told Pranab Mukherjee is no less. A leading business daily has, in fact, forecast that several measures, including an increase in diesel prices, approvals for more infrastructure projects, measures to boost capital inflows, pension reforms and reconsideration of the retrospective tax provisions of Pranab Mukherjee’s last budget, as the steps proposed soon after the UPA’s Presidential nominee vacates his office in North Block.
But right within 48 hours of the UPA announcing its presidential nomination have come two more stunning revelations. On June 18, one more international rating agency, Fitch, cut India’s credit rating outlook to negative. And RBI Governor D. Subba Rao brushed aside clamour of the industry to cut the interest rates and decide to maintain the status quo.
Both these measures are a slap in the face of the Government that has been assuring all and sundry over the last few days that India’s “fundamentals” are strong and growth rates would recover from the six per cent level upwards. Fitch is the second agency after S&P to downgrade India’s credit standing. Both have specifically quoted the diarchy in the governmental structure, with true power residing in theCongress President and the Prime Minister holding the baby, as one of the reasons for the downgrade.
In refusing to surrender to the clamour by industry and the Ministers for rate cut, the RBI has listed the inability of the Government to rein in the fiscal deficit and failure to manage the supply side. These together keep inflation expectations high and hence as a responsible central banker D Subba Rao would not cut the interest rates. Rao has even warned that further reduction in the policy interest rates at this juncture could exacerbate inflationary pressures instead of supporting growth.
In essence, the RBI itself is refusing to believe in the Government’s contention that good days are ahead. Anyone could read between the lines of the RBI’s assessment: persistence of overall inflation bothat the wholesale and retail levels, in the face of significant growth slowdown, points to serious supply bottlenecks and sticky inflation expectations, the central bank has concluded in keeping the interest rate at the present high level.
Some other straws in the wind aren’t giving the man destined to walk into the Rashtrapati Bhavan a happy reception either. His own colleague Veerappa Moily, the Minister for Company Affairs, has told a TV channel that there is need to have a relook at the retrospective tax provision made in the latest budget. He is worried about the “negative sentiments” that the retrospective tax application has created and wants a “relook to make the investment climate favourable”.
That is a soft way of telling his Finance Minister that the much- hyped retrospective tax is the stroke that has killed the goose that laid the golden eggs. Mohandas Pai, a former top honcho of Infosys, had no hesitation in admitting during a TV discussion that corporate India was “pleased” at seeing Pranab Mukherjee out of the North Block.
Corporate India has been telling everyone for several months that the retrospective tax and high interest rates have destroyed investor sentiments. Almost all the proposals for issuing IPOs have been withheld as investors are not responding; those who ventured soon found that the issues are flopping, including the Government’s own companies.
With all these negative sentiments crowding in about the economy’s management over the last three years, you just cannot dismiss the analysts’ prophecies that with Pranab Mukherjee’s expected to move into Rashtrapati Bhavan, his North Block seat will have enough room to change the economic climate.
In other words, the Congress wanted Mukherjee to move out to get that vacancy created. It is not a great secret that yet another 10 Janpath favourite in the Government, Commerce and Industry Minister Anand Sharma, has been very critical of the last budget of Pranab Mukherjee. So add two and two together and the sum total is more than four, even five.
That neither international rating agencies nor the country’s own central bank believe the promise in the budget that even after four months have passed that subsidy would be reduced to a level lower than two per cent of GDP and fiscal deficit to 5.1 per cent.
And with what face does our Prime Minister hold forth at the G-20 meeting in Mexico asking global leaders to manage their financial affairs better in the context of the Eurozone crisis when he cannot manage either inflation nor fiscal deficits in his own country?
It could just be that Mamata Banerjee was not far from truth when she claimed that Sonia Gandhi had permitted her to reveal the name of the Congress’s choice for the President’s post even before it was officially announced.
In politics truth is often read between the lines. And what better way to get several birds killed with one stone and get someone else to do your unpleasant job?
But the million dollar question is: should a failed finance minister be elevated to the office of President of the Republic?
The writer can be contacted at punjbalbir@gmail.com
Courtesy : The Hans India
No comments:
Post a Comment