Nobody needs to teach Prime Minister Manmohan Singh the importance of numbers in matters related to the economy. He has been an economist for a major part of his life.
Definitely, he also knows how important the numbers are in politics.
It is an unhealthy combination of both that has put him in a Catch 22.
A report in The Economic Times says the Congress may not have the required numbers to push through a diesel price increase in the monsoon session of Parliament.
Going by the Congress penchant for populism, the economy will always be a loser in the numbers game. AP
The report quotes a Cabinet minister ruling out any chance of a price increase of diesel, LPG and kerosene, when inflation stays above 7 percent.
A decision on this will require extensive discussions with political parties, the minister told the newspaper.
The report says an oil ministry official indicated the price hike is not possible before the vice-president polls on 7 August and after that is the monsoon session. And it is here the Congress’s weak numbers will play spoil sport.
The Congress is also wary that an increase in fuel prices will push up the inflation rate further. Food inflation is already high at 10 percent.
The news comes as a dampener. Especially, since there has been wide expectation that Manmohan Singh as finance minister will do something to revive the sagging economy.
Economists and the markets will consider an increase in diesel prices as a signal that the reforms, which they have been desperately seeking, are finally taking off.
Rating agencies have said only a cut in fuel subsidies can bring down the country’s fiscal deficit which has been budgeted at 5.9 percent for the current financial year.
And who knows this better than Manmohan Singh?
But against his own wisdom, he is forced to drag his feet, not only on fuel prices but on all reforms.
Indications are that the brouhaha over Manmohan Singh holding the finance portfolio may well have been just that. All expectations of reviving economic reforms are dying a slow death.
On Monday, there were reports that the Samajwadi Party and the Left have joined hands in opposing FDI in retail, another key reform.
A letter from the leaders of these parties to the prime minister said they fear thousands may lose jobs if foreign retailers enter the country.
And there are other reforms too waiting for the kind attention of the lawmakers. Pension Bill and FCRA Amendment Bill are among them. They are also facing the same fate.
The Reserve Bank of India has made it clear that the next move to kick off economic activity has to be on fiscal policy front from the government.
With the government buying more time for its reforms again and again (first presidential polls and now vice-presidential), no announcement is likely to come through before the central bank’s policy review on 31 July. And the markets will have to brace up for a status quo on policy rates.
Going by the Congress penchant for populism, the economy will always be a loser in the numbers game.
