Parliament’s Monsoon Session – An arena for pre-poll battles
By S. Sethuraman
A fairly long interregnum after the budget session enabled the UPA-II Government to further shake off its policy weariness, in the face of worsening economic trends, and put up a fighting show with some bold gestures, especially the long-thundered FDI reforms of the Finance Minister. That it may have come too late to draw investors back and give us some positives is another matter. India is truly caught up in the whirls of global spillovers.
But politics trumps economics, and the UPA Government had first to cave in hurriedly to bifurcate a dynamically-growing Andhra Pradesh, in deference to the wishes of a vote-conscious Congress President Ms. Sonia Gandhi. There may be equally strong reasons for and against the creation of Telengana but the abruptness with which it was foisted on the people of this vast resource-rich region is surely questionable, apart from being patently for electoral purposes.
In the unmaking of Andhra Pradesh, a fast-growing state with vast potential yet to be tapped, a long-term uncertainty has also been generated for a cosmopolitan capital city of Hyderabad, with its Rashtrapati Nilayam and strategic location for an already extensive military complex and defence installations. The city’s reputation for high-tech development, modern infrastructure, and key industrial enterprises, and as one of the most promising investment destinations in the country is now at stake.
This leaves out lakhs of people from the coastal regions and Rayalaseema, hitherto making up a unilingual state of composite culture, who have invested and toiled for the city’s impressive advances for over five decades of its coming into existence in mid-1950s. Hyderabad is today what it is because of their major contribution. That there are deleterious consequences for future has begun to emerge already with a quit notice to non-Telengana population served by Telengana leader Mr Chandrasekhar Rao.
That there is broad political support for formation of Telengana in Parliament is no doubt true, as each party has tried to be first in the queue of support to claim votes at the next opportunity. Here, the grand calculations of the pan-national party running an unpopular government at the Centre may go haywire, taking the present Andhra Pradesh as a whole, which would cease to be its vital base.
Be that as it may, the monsoon session will certainly witness a high pitch of pre-poll political salesmanship on a host of issues. How much of what Government regards as key legislation gets through is still an open question – food security, land, financial sector reforms, corporate laws etc. BJP, which had relatively quietened in its attacks on UPA as it focussed more on the Modi factor, would revert to its tactics in the session.
Mr Chidambaram has sought support for bills on insurance and pension seeking a higher cap of 49 per cent for FDI but BJP is unwilling to go beyond 26 per cent. The opposition may, however, back the food security bill with some amendments and thereby deprive the Congress of parentage. BJP which was well ahead of Congress in backing formation of Telengana is demanding a bill in this session.
The most dominant issue should certainly be the economy which provides ammunition for the BJP -led opposition to challenge the Government with its long list of failings on the economic front, whatever the desperate current efforts to reverse setbacks and restore a sliver of hope for investors at home and abroad.
All indicators so far in 2013 point to continuing difficulties – declining manufacturing output, still rising consumer price inflation, fiscal and current account imbalances, a highly volatile rupee and external vulnerability risks. Government’s first line of defence would be to blame it all on the global environment. But, strangely, as other advanced economies, especially USA, seem to be on road to strong recovery, India’s drift continues.
The Finance Minister Mr Chidambaram has no doubt rightly persevered to attract capital flows, FDI in the main, to preserve India’s external viability and shore up the rupee. He has been talking up the economy almost on a daily basis but with little effect. His bold package of September 2012 to overcome the stigma of policy paralysis evoked little response. Recent “big bang” openings for FDI have come at a time of great uncertainty and volatility in global financial markets.
As of now, we have had little by way of response – either in attracting more FDI, even as we may go on extending our baits, especially becoming romantic with a dominant role for MNC in multi-brand retail, or in checking the outflow from portfolio investments of FIIs. This is mainly due to a macro-economic disarray and the rapid rupee depreciation. Nor has there been any sign of revival of domestic investments by the corporates, no matter the earnest appeals of the Finance Minister.
Overall, Mr Chidambaram’s policy declarations, mostly of intent, have failed to evoke due response. But he is certainly confident of maintaining intact his credibility in expenditure cuts and meeting his own deficit targets – irrespective of whether fiscal policy is aiding growth or ensures tangible reduction in prices. This is unlikely as fuel prices would have to be on a rising curve to conform to fiscal targets. The high inflation era of UPA is verily driving down the rupee adding to current account financing strains. The rupee had depreciated by 10 per cent b y July-end over its 2011/12 level.
The opposition, especially the BJP will make Manmohan Government’s life miserable in Parliament by focusing on these vital issues in the election year. (IPA Service)