Rational Expectations

Rational Expectations
Sunil Jain

Hundred days into its second term, and the BJP-led government has every reason to feel proud of its record in pushing through a huge number of critical Bills in Parliament, and it has clearly struck the right chord by the emphasis on information technology -- this single step, for instance, has changed Prime Minister Vajpayee's image from that of an old-time politician to that of a technology-savvy Chandrababu kind of new-millennium leader.

But with the nation in the midst of perhaps the biggest confrontation in recent times with organised trade unions -- apart from the crippling of ports and UP power strike, and truckers' agitations, even the postal unions are threatening a nationwide hike -- the government's 100-day hosannas are perhaps farthest from people's minds. Perhaps over-dramatic, but the question increasingly being popped is: is Vajpayee going to be able to take on unions like Margaret Thatcher did in the UK, or will he just postpone the problem, by promising to review it again?

So far, the government has been taking a tough stand against the strikers in Uttar Pradesh, getting the NTPC to man the generating units there, and openly accusing a segment of the striking powermen of being hand in glove with power thieves mafia which steals anywhere between Rs 2,000 and Rs 3,000 crore worth, or close to 40 per cent, of the power generated in the state each year – and, the argument goes, it is to protect their loot that they are opposing power reforms in the state.

What's worrying though is that the government has already begun to show incipient signs of distraction, of taking decisions and then rolling them back, and even helping the favoured few. The most recent and telling example of how the government is run, of course, is the confusion over what was done to the Telecom Regulatory Authority of India a couple of days ago. The first day, infotech minister Pramod Mahajan pointed out that the new TRAI's recommendations would be binding on the government.

The next day, he said they would not, and now according to some in government, it appears that the truth may lie somewhere in between -- some types of recommendations will be binding and some won't. Mahajan, it appears, may just have goofed up again!

The Cabinet decision which didn't get focussed on so closely, thanks to the TRAI hogging the limelight, of course, is that of the government agreeing that airlines flying small planes to remote and hilly areas like in the Northeast and Kashmir would be supplied aviation fuel at around half the price paid by others in the country. Now while that sounds very progressive all airlines today pay double the global price for aviation fuel, as this is used to subsidise kerosene and LPG -- the airline which benefits the most by this is Jet Air, which has recently bought turbo-prop aircraft for these routes.

Now while Indian Airlines is theoretically also entitled for these benefits, if they buy new planes for smaller cities and remote areas, the point is that the Cabinet decision tends to help one firm over another.

Another more recent example, this time concerning the poor Yashwant Sinha who earned the sobriquet `Rollback Sinha' in his avataar as Finance Minister in the second BJP government (not the 13-day one), is that of the excise duty exemptions for the Northeast. Last year, in July, at the Prime Minister's instance, the Cabinet cleared a proposal to exempt all new industrial units in the Northeast from paying excise duty for a period of ten years. Immediately, all cigarette companies in the country applied to set up fresh capacity in the region of 183 billion sticks at an investment of Rs 1,400 crore -- essentially, the entire cigarette making capacity in the country would have been shifted to the Northeast, to save the industry close to six thousand crore of rupees of excise payments each year.

Given that the government would stand to lose really huge sums of money, not surprisingly, Yashwant Sinha decided, on December 31, to rescind the excise exemption for cigarette and pan masala units. Well, poor Sinha was given an earful by the Prime Minister, and re-notified the excise exemption for tobacco and pan masala units last Saturday. Now it can be theoretically argued, though it must be admitted that there is no iota of any sort of proof, that this was done not so much to benefit the northeastern states, as to benefit the country's top tobacco and pan masala firms. Now surely actions such as this do little to boost the government's image.

This is the crux of the problem. In legislative terms, the Vajpayee government's achievements are quite considerable, but in most other areas, including its inability to take tough action as in the escalator tragedy at the Delhi airport, its record is quite pathetic. Maggie's spine or a run-of-the-mill politician's lack of spine? Vajpayee's free to make his own destiny.