What did P Chidambaram’s interim budget actually set out to achieve? How truthful were his assertions? How did he analyse the economy's problems and how did he seek solutions?
The main thing that strikes you about his budget is that it is often about himself – about vindicating his stand and his performance. Commentators saw Chidambaram’s speech as being aimed at voters, where he painted a rosy picture of the UPA’s performance over 10 years, but the underlying theme was his heroic role in rescuing the economy over the last 18 months. This writer did a scan of his budget speech. A word search on the PDF document showed up the use of the word “I” 92 times in his 6,586-word speech (wordage excluding the title of the address).
That is one “I” – a reference to himself - every 71 words. While no finance minister can entirely avoid the “I” word – after all, all speeches begin with “I rise to present the budget for…” – Chidambaram apparently loves the “I” word more. To check whether using “I” is a Chidambaram speciality or a common affliction among finance ministers, we did a quick word check of his predecessor Pranab Mukherjee’s budget speech of 2012-13.
The result: we found 145 references to “I” in Mukherjee’s speech. So is Mukherjee more of an “I” specialist than Chidambaram? More counting told us the opposite. Applying the law of proportionality – matching like with like – we found that Mukherjee used the “I” word 145 times in a boringly long speech of 14,157 words, whereas Chidambaram did his 92 “I’s” in a shorter speech of 6,586 words. This means Mukherjee’s “I” average was lower than Chidambaram’s. While Chidambaram used the “I” once every 71 words, Mukherjee did so only once every 98 words on an average. The tone of tenor of
Chidambaram’s speech also conveyed the same “I-ness”. Right from the outset, Chidambaram’s budget speech is about himself and how he is the hero of the Indian economy’s rescue effort. In the very first operative para, Chidambaram starts by talking about how “I prepared to write this speech…” but as we proceed we can note how he paints himself as the hero. Thus, even though the fiscal problems of the UPA are the doing of the entire government over two terms and two finance ministers, Chidambaram chose to indirectly declare himself the saviour – while any failures belong to someone else or the whole world.
So this is how our hero fought to save the country. “Within days of my return to the ministry of Finance, I had declared that our objectives were fiscal consolidation, price stability, self-sufficiency in food, reviving the growth cycle, enhancing investments, promoting manufacturing, encouraging exports, quickening the pace of implementation of projects, and finding practical solutions to certain stressed sectors such as petroleum, power, coal, highways and textiles.” P Chidambaram. AFP.
But did any of these focus areas really come good due to – or only due to - Chidambaram’s exertions? While Chidambaram has ensured that the fiscal deficit is within the red line of 4.8 percent, the quality of the fiscal adjustment is poor. He has cut plan and capital expenditure, not wasteful subsidies. While the indices have come down over the last two months due to the seasonal easing in vegetable prices, core inflation is up and the UPA’s overall inflation achievements are poor by any standard when taken as a whole. Self-sufficiency in food is hardly a central achievement – since, beyond setting MSPs, states are the primary drivers in agriculture. Exports are reviving, but is this due to the sharp fall in the rupee or the global revival or Chidambaram’s efforts? As for finding “practical solutions to certain stressed sectors such as petroleum, power, coal, highways and textiles” the results are yet to show. As for the root causes, Chidambaram happily shovelled them back to his predecessor and the rest of the world. First, he informs us that “Since September 2008, the state of the world economy has been the most decisive factor impacting the fortunes of every developing country.” And also, that “the challenges that we face are common to all emerging economies.” In short, everybody had the same problems – it had nothing to do with UPA or him. But if all the problems had to do with the global slowdown, why not spare his predecessor? But Chidambaram additionally tells “Hon’ble Members” that “the slowdown began in 2011-12. In nine quarters, the GDP growth rate declined from 7.5 percent in Q1 of 2011-12 to 4.4 percent in Q1 of 2013-14. Thanks to the numerous measures that I have narrated, I was confident that the decline will be arrested and the growth cycle will turn in the second quarter. I believe I have been vindicated. Growth in Q2 of 2013-14 has been placed at 4.8 percent and growth for the whole year has been estimated at 4.9 percent. This means that growth in Q3 and Q4 of 2013-14 will be at least 5.2 percent. I can confidently assert that the economy is more stable today than what it was two years ago.” (Italics ours) So, the problems were created by someone else, the solutions were entirely courtesy, “I, me, myself.” And can Chidambaram ever falter, fail to deliver? Of course, not. “I had made three promises and I had asked Hon’ble Members to keep before them the faces of the girl child, the young student, and the poor” Chidambaram apparently did and grandly declared that “To ensure the dignity and safety of women, I promised the Nirbhaya Fund and put Rs 1,000 crore into the Fund.” Promise fulfilled, he went to the second one – the student. “I had promised an ambitious programme to skill millions of young men and women and had tasked the National Skill Development Corporation to implement the programme…”. Promise two fulfilled with more money allocated to skill development. It is with the third promise that Chidambaram has faltered – the direct benefits transfer scheme. The aapka paisa, aapke haath slogan has gone nowhere, and the direct cash transfers scheme, once thought of as a vote winner, has been temporarily discarded in LPG subsidies before the election even while the subsidy has been raised to 12 cylinders. But he bravely announces that he has done his bit for the poor. He says: “The latter (direct benefits transfer) scheme has been put on hold for the time being pending resolution of some difficulties that have been pointed out. However, let me reiterate that the government remains fully committed to Aadhaar under which 57 crore unique numbers have been issued so far and to opening bank accounts for all Aadhaar holders in order to promote financial inclusion. Who needs Aadhaar? It is those who are at the bottom of the pyramid, the poor, the migrant workers, the homeless, and the oppressed who need Aadhaar, and we will ensure that they get Aadhaar. I have no doubt that in course of time even critics of Aadhaar will realise that Aadhaar is a tool of empowerment.” So third promise too fulfilled. The poor get Aadhaar numbers. As for growth, since he considers himself a growth messiah, Chidambaram has this to say. “Just as there are business cycles, there is a cycle around the trend growth rate of an economy. Over a period of 33 years, the trend growth rate in India has been 6.2 percent. Average annual GDP growth during the period 1999-2004 was 5.9 percent, that is below the trend rate. In the next five year period 2004-2009, it was 8.4 percent and, in the period 2009-2014, going by the CSO’s estimate, it will be 6.6 percent. UPA-1 and UPA-2 have delivered above the trend growth rate.” The figures are fine, but what is the logic of taking the last 33 years for the trend line. And if you believe in business cycles, is it not entirely possible that the NDA regime got the downcycle while UPA-1 got the upcycle? It is in the second half of UPA-2 that we get the downcycle again – and this could continue. How does he explain two consecutive years of sub-5 percent growth – the first time in 23 years? The sum-total of Chidambaram's budget speech can be summed up in this paragraph of his speech: "I can confidently assert that the economy is more stable today than what it was two years ago. The fiscal deficit is declining, the current account deficit has been contained, inflation has moderated, the quarterly growth rate is on the rise, the exchange rate is stable, exports have increased, and hundreds of projects have been unblocked." The most important words in the paragraph above are "two years ago" - when he wasn't around. Chidambaram is a pastmaster in putting the right spin on UPA's recent non-performance. However, he is ever better at distancing himself from its problems and identifying himself with the solutions.