The action-not-taken report

The real problem with the common man, my teacher Kaushik Basu wrote many years ago, is that despite the plethora of ‘common man’ budgets over the years, his lot has almost conspired to remain so, well, common. A thought, I’m sure, shared by various finance ministers like Yashwant Sinha whose budget was lambasted by these very common men and (I’m sure he feels) even commoner analysts. Sinha, though, perhaps has a footnote to add — a grievance about the economy. Sinha, you see, began this practice last year of submitting action taken reports on various promises made. Problem is, that while the ATRs seem to suggest a very large part of the budget’s promises have been met, the ungracious economy just doesn’t seem to respond.

But take a look at the ATR, and you figure out why it doesn’t seem worth the paper it’s printed on. Sure, it tells you that, against the provision of Rs 61 crore that was to be made for Farm Water Management in eastern India, a provision of Rs 70 crore has been made. Or that the Pradhan Mantri Gram Sadak Yojana has indeed been given the Rs 2,500 crore it was to get.

But when it comes to the major policy announcements that government hasn’t been able to get much done on, the replies are so bureaucratic, they don’t tell you anything. Last year, for instance, Sinha spoke of how the government granaries were overflowing and how the entire policy of central procurement needed to be re-thought (this year, the granaries have 3.4 times the stock they need, and this cost them Rs 5,700 crore extra) — so he announced that FCI’s role would be curtailed, that state governments would be asked to procure and distribute foodgrains on their own. What happened after that is well known. The states refused to go along, and the scheme’s all but dead. Well, here’s what this year’s ATR has to say about it: a committee was set up and this has had two meetings, chief ministers have expressed their concerns, and the committee is “continuing its work and modalities for making changes in management of Food Economy will be made in consultation and cooperation of the states”. Make of that what you will.

Last year, Sinha promised to introduce legislation making it easier for firms to lay off workers, and to amend the Contract Labour Act. Well, that never happened, and it was only last month that the Cabinet cleared the first part of the proposed legislation. With the Congress opposed to it, clearly the proposal’s going nowhere, but here’s what the ATR has to say: “The Group of Ministers... has decided to hold further discussions... in order to finalise its views on the proposal to enact a new legislation....”

So what use is the ATR really? And when will the ATRs actually start looking at the real issues? Merely talking of the crores spent on projects, it is obvious, doesn’t mean anything. For a really evocative example, see the NIPFP report by Indira Rajaraman on Punjab. We all know how much money successive local governments in Punjab have spent on education or irrigation, right? What Rajaraman’s done is to figure out just how this money is really spent. In the case of the education, for instance, just 1 per cent is spent on capital expenditure like books, blackboards and chalk. And close to 90 per cent of irrigation outlays are spent on salaries, leaving precious little for building canals and waterways.

Or take this budget’s main plank — that of getting state governments to carry out reforms in the farm sector by linking this to an incentive fund of sorts. This, as this newspaper has argued earlier, is in itself no guarantee of success. For, in the case of the Incentive Fund created by the Eleventh Finance Commission, the parameters used to judge if states are reforming are very liberal. But try telling people in Andhra Pradesh — generally touted as one of the ‘reformist’ states — about how great their government is, and they’ll laugh at you. Especially the 1.4 lakh rickshaw pullers and other no-hopers who lost over Rs 430 crore in the collapse of the Charminar Cooperative Bank earlier this week.

Banks can collapse, it is true, but what happened to this one was truly shocking. As long ago as September last year, the RBI inspected the bank and recommended to the state government (only the state has this power) that its board be superseded as the bank was not in good shape — its lending practices were flawed and it did not conform to RBI guidelines. Well, guess what? The government sat on the report, and it was only when the bank collapsed that Chief Minister Naidu made the report public.

For the millions who’ve lost their life’s savings in this manner — apart from the UTI fiasco, we’ve had 10 major stock market scams in the last decade — the huge imposts Sinha’s imposed in his budget are quite inconsequential. None of them would mind paying a lot more tax, or have the interest rates on their NSCs cut even further, if only they could have some genuine governance. Especially since the prime minister did say, to this newspaper’s editor some months ago, that in the last two years of his term he’d like to concentrate on governance.

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