Does the Presidential address to Parliament show us the way forward? On the face of it, the speech is fully loaded, with a wish-list that closely follows the manifesto put up by the BJP before the elections with some recent developments also thrown in. Quite clearly, the direction is clear and it may be assumed that the roadmap has been put in place. How are things likely to pan out?
While the government has a to-do list, the real challenge is how to start tick-marking the components in terms of getting things done. Broadly, the government is talking of poverty reduction and social welfare; investment in agriculture; speeding up infrastructure investment; controlling inflation; improving services, especially for the poor and in rural areas; e-governance; better Centre-state relationship and checking corruption. These do sound like statements which every government would like to follow. What is required is definite action points from the government for moving closer to accomplishing these goals.
There are three action areas involved here. The first relates to certain affirmative action by the government through higher spending, which will kick-start the growth process. The question is whether or not the government has the money to do this. The fiscal balance appears to be quite tenuous today with little room to increase spending. The government has to take a call on whether or not it should increase the fiscal deficit and earmark this increase for specific infra projects which will help revive the economy. Alternatively, tough decisions have to be taken to lower subsidies and the two areas that come to mind are fuel and fertilisers which can bring in some savings to the government that can be channelled for infra projects. But surely the government has to evaluate the growth target for the year to figure out the impact on tax revenue too, as this can upset the fiscal arithmetic as it did in the last two years.
There are, however, some pressure points, such as poverty reduction, that can act as impediments for the government. There will be pressure to expedite the implementation of the Food Security Act to ensure that the poor get foodgrains through whichever system deemed as best: PDS or cash transfers. There has been talk of investment in agriculture and rural infrastructure. Can things be done differently given that there may not be enough money to be spent on improving farm activity by way of