The 14 per cent hike in railway passenger fares, disconcerting as they undoubtedly are, will be perceived in two very different ways. To those looking at the big picture, the Indian Railways have no choice but to increase revenue and improve their financial health if they are going to play any meaningful role in Prime Minister Narendra Modi’s proposed infrastructure upgradation.
Ideally, the fare hikes should have come much earlier but the fact that the new Government has bitten the bullet in the first month of its tenure will be greeted with a measure of grudging approval. At the same, a section of the political class that has to cater to a popular and populist constituency will doubtless disapprove of the fact that passengers will now have to pay more. Read along with the spiralling food prices — a function of the El Nino scare — Opposition parties are certain to try and use the fare hikes as an instrument of mobilisation.
The Opposition is unlikely to be so intensive as to provoke a rollback, a feature of coalition Governments, but that is not to imply that the political class is slowly adjusting to the new realities of a regime where decisions, even tough decisions, are actually taken and not held in unending abeyance. From all accounts, the changeover to a stable dispensation, while providing reassurance to those who want India to get back to work, is deeply unsettling to those who are dedicated to pursuing a sectional agenda, regardless of its costs. Ironically, this even includes a fraction of the ruling BJP which, while delighted that the party is finally in a commanding position at the Centre, is deeply resentful of the fact that the Prime Minister’s authority is so all-encompassing. A weak Government may be a curse for Indians but it is the bread, butter and jam for the power brokers and lobbyists that are to be found in all political parties.
For the Modi Government, the short-term challenges are important not merely because they have to be met but because how they are met will set the tone for the rest of the Government’s tenure. At present, there is a mood of generosity towards the Government. It is not being blamed for many of the present woes, which are either inherited or beyond its control. However, this grace period is likely to extend only till the Budget. After that the Government is going to be judged on both a day-to-day and month-to-month basis.
This is not to suggest that Modi should eat the early warning of a tough Budget that he delivered in Goa earlier this month. That the state of public finances is precarious is no State secret. In the past three years at least, it was sufficiently clear to everyone who had a stake in India that the so-called Dream Team of economists had not only been unfaithful to their own reputations but had also concealed the extent of their ineptitude from the people. Consequently, there is the paradox of a Government voted into power on the promise of bringing in achchhe din having to start the day with a belt-tightening, austerity Budget.
Modi’s communication skills and Finance Minister Arun Jaitley’s courtroom reputation should perhaps suffice to explain to the people of India the economic backdrop of the Budget. That it will have to be a tough Budget that can’t distribute lollipops generously is taken for granted. Actually, it is taken as read only because people know that Modi is temperamentally capable of taking decisions that run the risk of short-term unpopularity. Had Rahul Gandhi become the Prime Minister, as The Economist recommended, the Budget may have actually been an exercise in more freebies. But that is the difference between a PM who runs India as a mission and someone who would have occupied the top job because it was his birthright.
However, the willingness of Indians to countenance a tough Budget will depend on a number of factors. First, the people will have to be persuaded that the short-term hardships are aimed at ensuring a better India. In other words, there has to be a clear elaboration by the Finance Minister of the future roadmap for India. He has to paint a realistic picture of how India will look in five years time.
Secondly, a people can countenance hardship and even some personal sacrifice if it is clear that the Modi Government’s ability to handle taxpayers’ money differs significantly from that of its predecessors. People will be interested in knowing how the quality of governance will differ from the past. More bluntly, there is a need for the new Government to demonstrate that it is capable of maintaining the important distinction between public money and private greed.
Finally, the ability to carry through an austerity Budget will also depend on the Government’s ability to ensure a sense of fair play. The UPA Government had been most generous with its mega schemes and in expressing concern for the poorest. This did not cut electoral ice because it soon became apparent that for the Congress Party, public resources were for private advantage of friends, loyalists and cronies. If the BJP travels down such a road, it may as well say goodbye to its credibility. For the Modi Government, this is going to be more than a Budget: it will be an agnipariksha. If it passes the test, India will change and for the better.