NDA not quite 'Congress with a cow'; but it still looks like UPA-3, minus a few scams

When it comes to the economy, the NDA is bereft of ideas, it would seem. It does not need a disgruntled Arun Shourie to criticise the present dispensation as “Congress with a cow” for similar things were said about Arun Jaitley’s first budget in July 2014 – “Chidambaram’s budget with saffron lipstick”. One need not try to reinvent the wheel just because you are NDA. If the UPA had some good ideas there is no need to be antagonistic to them, whether it is Aadhaar, financial inclusion, or even direct benefits transfer. What the UPA chickened out of doing the NDA can implement sensibly and claim as its own. It is always easier to come up with new ideas, but tough to make them work. So implementation is something NDA can take credit for, as it has done with the Jan Dhan no-frills banking scheme which has now reached nearly 100 percent of households. [caption id=“attachment_2484364” align=“alignleft” width=“380”] PTI image[/caption] However, it is one thing to extend good ideas, quite another to resort to the same bad ideas that dogged the P Chidambaram and Pranab Mukherjee years at the finance ministry. The financial jiggery-pokery of the UPA years are not being abandoned by the NDA either. Chidambaran (and Pranab Mukherjee) had no qualms about cooking their books to please the rating agencies. They robbed one public sector entity to save another (ONGC to save Indian Oil), denuded cash-rich public sector entities of resources in order to tackle the fiscal deficit (confiscated Coal India’s surpluses by paying out extra high dividends), camouflaged real deficits by issuing oil bonds instead of directly paying subsidies to the oil marketing companies from the budget, used the LIC as a backstop for the government’s disinvestment programme, and generally letting one year’s government expenses spill over to the next to make budgets look better than they are. If any corporation did this kind of book management, it would be pilloried by investors at the very least, if not hauled up by Sebi or the corporate frauds office. If budget deficits were still looking unbalanced, both Mukherjee and Chidambaram cut productive expenditure - plan and capital spending - thus worsening the economic slowdown. This is the situation Jaitley and the NDA inherited – and which they had to fix. The least one expected the NDA to do was clean up the books. But from all accounts the NDA continues to follow the same Chidambaram formula: ONGC is still subsidising fuel (though a bit less), Coal India is being asked to fork out more dividends, disinvestment is still being bailed out by LIC, and a shift in government book-keeping to an accrual-based system - where the year’s expenses and revenues are booked correctly rather than on a cash basis - is not even being discussed. A Times of India report on the scaling down of the disinvestment target shows that nothing much has changed under NDA. There is no doubt that government finances have improved under the NDA, but if one were to take the gains from oil prices (and higher taxes on petro-goods) out of the equation, the picture may have remained just as dismal as under Chidambaram and Mukherjee. About the only budget management exercise where the NDA finance ministry may differ from the NDA is in not axing public investment as brutally as Pranab and Chidambaram did, but when you ask cash-surplus entities like Coal India to pay more as dividends, isn’t that the same as reducing the resources available for public investment? If ONGC is going to continue subsidising the oil marketing companies, how is it going to invest in more oil exploration, especially at a time when global oil prices are weak? The NDA government is still basking in the glow of 7 percent plus GDP growth based on a new method of calculation (the gross value added methodology), but the reality is that direct tax collections are expected to be 5-7 percent lower than budgeted, and expenses will rise due to higher payments due to the implementation of OROP (one-rank-one-pension) this year, and from next year, when the Seventh Pay Commission will give its pay award. The Will the finance ministry then go back to the usual trick of cutting public expenditure just to balance its books? Arun Shourie may be miffed that the NDA-2 has not used his considerable talents when it is not overloaded with competence, but it is upto Jaitley and Narendra Modi to prove that he is wrong. The onus, to prove that NDA-2 is not UPA-3 minus corruption, is on them. Shourie may have been too uncharitable to the NDA by labelling it as “Congress with a cow”, for  this cow comes with some significant achievements, including reduced corruption at the centre, but his warning cannot be ignored.