Saturday, August 11, 2012

Budget backlash

The fuel price hike announced by the Finance Minister has galvanised the Opposition to close ranks in a rare show of unity. But will the sound and fury translate into long-term political gains? Pramod Kumar reports

In the final Cabinet meeting prior to the presentation of the Union Budget this year, three important financial decisions were taken. As the meeting drew to a close, the Petroleum Minister made a request for a hike in fuel prices. Finance minister Pranab Mukherjee assured him that some steps had already been taken through the excise duty channel. But agriculture minister Sharad Pawar and railway minister Mamata Banerjee warned that a fuel price hike would fan anger against the government and adversely affect the prospects of the UPA in Assembly Elections scheduled for the coming months.

Mukherjee replied that not hiking fuel prices would adversely affect the pace of pro-people projects. So the allies advocated a ‘wait and watch’ policy: increase the prices of petrol and diesel and then gauge the popular reaction; if things threaten to snowball, get the UPA chairperson Sonia Gandhi to intervene and order a partial rollback. It was also suggested that the time-lag between the hike and the eventual rollback could be utilised to lessen the oil pool deficit. In that scenario, the Congress would have its cake and eat it too, it was pointed out.

But the fuel price hike triggered something that the Congress had not bargained for: new-found unity in the Opposition ranks which had for months been in disarray. In fact, a few parties that support UPA from outside have also thrown their weight behind the hue and cry raised by the Opposition. By protesting both inside and outside the ring, the two Yadav satraps — Lalu and Mulayam — have made it amply clear that they might even withdraw their unilateral support to the UPA on the issue of price rise. Political pundits, however, feel that this will not affect the UPA as it enjoys a comfortable majority.

The problem is that this approach by the allies has found resonance in the Congress itself. Some elements in the ruling party are not convinced with the logic trotted out for raising the petroleum prices through the Budget. Party leader Digvijay Singh has already expressed his reservations on the issue. Similarly, there is unease among the youth brigade too. In fact, the son of petroleum minister Murli Deora, Milind Deora, has openly come out against the decision. And he minced no words. He went as far as to write letters to both Sonia Gandhi and Manmohan Singh seeking their intervention.

Congress strategists believe that such a step was necessary to correct certain financial misadventures of UPA-1. They claim the priority for the current regime is to strengthen the economy. Prior to the Budget, Mukherjee had clearly explained all the tough measures and had assured the Cabinet committee that although these measures would hurt momentarily, they would lead to long-term benefits. They would help put the economy back on track following the recession. He put forth the same explanation in the aforementioned Cabinet meeting too.

While Trinamool Congress and DMK had bought the logic then, they came out openly against the decision once the recommendations were implemented. They were in favour of reduction of service tax and excise duty. The fuel price hike will affect their two core groups, farmers and the middle class. While the former will be affected by the rise in the price of diesel, the increase in transportation costs will hit the latter. Transportation cost escalation might fuel a further rise in the prices of essential commodities.

Talking to B&E, Trinamool leader Dinesh Trivedi said that while the Railway Minister kept diesel transportation out of the ambit of service tax, the Finance Minister failed to do his bit. This, according to Trivedi, was not in accordance with the sentiments of the allies.

The same goes for DMK, whose leader and Tamil Nadu CM M. Karunanidhi shot a letter to the PM merely three hours after the Budget was presented. A. Raja, Union Communications Minister, wasted no time in personally delivering it to the PMO. DMK is peeved as it could find itself on sticky ground in the Assembly elections due next year. However, sources claim that there is another reason behind this response. The PMO is apparently not happy with M.K. Alagiri and the way he runs his ministry. He has been told so in as many words by the PMO, but he has refused to mend his ways. DMK is now using this issue to settle scores and ensure that Alagiri remains a part of the ministry.

This was also the first time in India‘s parliamentary history that the entire Opposition staged a walkout in the middle of the Budget presentation. There were two flanks that were particularly active. The command of the UPA allies was with Mulayam Singh while the united Opposition was spearheaded by leader of the Opposition in the Lok Sabha, Sushma Swaraj. Swaraj had called a joint meeting of the Opposition in the office of the BJP Parliamentary Party prior to the Budget session. All matters related to floor coordination were discussed there. It was decided how, and when, the Opposition would corner the government over the price rise issue. It was also decided that some Opposition parties such as JD(U) would raise the matter of corruption and then the entire Opposition would walk out of the House.




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