By Amulya Ganguli

The BJP has reasons to smile because of the election results. An outright win in Goa, a return to power in Punjab and a third position in U.P., pushing the Congress to the last slot, cannot but be satisfying at a time when the party is facing the “porngate” scandal and a defiant former chief minister in Karnataka and a sulking Narendra Modi in Gujarat. It might have won in Uttarakhand, too, if it had removed the tainted Ramesh Pokhriyal from the chief minister’s post early enough to enable B.C. Khanduri retrieve the lost ground.
Although the BJP benefitted from the follies of its opponents rather than any special effort of its own, what these results show is that the BJP’s position as the national alternative to the Congress remains unchanged. However, it started the campaign nervously as some of its moves in U.P. on the eve of the elections showed. While the induction of the former rebel, Uma Bharati, into the party was the first sign of its desperation to woo the backward castes, the second was the hasty manner in which it tried to accommodate another OBC, the former BSP minister, Babu Singh Kushwaha, despite the charges against him in the health mission scam.
Since the Kushwaha episode caused a mini-revolt in the party against its president, Nitin Gadkari, the latter had to tell the Koeri leader that his formal admission will be delayed. But, the incident, along with Modi’s refusal to campaign in U.P. or anywhere else, and Varun Gandhi’s jibe that the party had more than 50 chief ministers, indicated that all was not well with the BJP.
But, in the end, none of it mattered. Although the BJP’s tally of seats has dropped from 51 to 47, and its vote share from 19 per cent to 15, it will be happy to remain ahead of the Congress since, in U.P., the Congress’s discomfiture matters a great deal because it shows how the wind is blowing in the Hindi heartland. If the Congress’s failure to rise above the fourth slot is taken together with its defeat in Punjab and Goa, then the message from the electorate is that the party is in serious trouble.
This assessment will be music to the BJP’s ears because it means that the party can approach the general elections with considerable confidence. True, it has its own problems. For one, the question of the prime ministerial candidate remains open. At least four contenders appear to be in the queue – the never-say-die L.K. Advani, the grumpy Modi, and the two Delhi-based stalwarts – Arun Jaitley and Sushma Swaraj – who were pointedly ignored by the RSS when it chose Gadkari as the BJP president. It is obvious that the final choice will not be a smooth affair.
For another, there is no certainty that the NDA will remain in its present form as the general election approaches. It isn’t only that Nitish Kumar will walk out if there is an attempt to field Modi, no one knows how the Janata Dal (United) leader will respond to any overtures from Naveen Patnaik and other votaries of a new Third Front. However, factors such as the NDA’s durability would have aroused greater concern for the BJP if it had fared badly in the elections. But, with two victories under its belt, it will be on firmer footing.
The victories have also been a godsend to Gadkari. It is no secret that the portly Maharashtrian is regarded as a “provincial” (the term which Jaswant Singh used for for the former president, Rajnath Singh) by the more cosmopolitan among the BJP’s leaders. Gadkari is also gaffe-prone, as his description of Lalu Prasad Yadav and others as Sonia Gandhi’s canine followers and of Afzal Guru as the Congress’s son-in-law showed. He also tries to defend the indefensible, as could be seen from his attempts to save B.S. Yeddyurappa by saying that the former chief minister’s acts were only immoral and not illegal. The experiment with social engineering with Kushwaha would have also rebounded on him if the BJP fared poorly.
But, now that the BJP has survived the latest trial with relative ease, its next test will be to save the NDA. If it fails, then its chances of reaching the corridors of power at the centre are remote. To make matters worse, there is no one with Atal Behari Vajpayee’s wide appeal to sustain the NDA even if the BJP reiterates its dumping of the Hindu agenda – building the Ram temple, scrapping Article 370, introducing uniform civil code – as it did in 1996.
The BJP has an opportunity to undo the 2004 and 2009 verdicts considering that the Congress has lost its sense of direction because of the tug-of-war between Sonia Gandhi’s socialism and Manmohan Singh’s neo-liberalism. But, the BJP has no one with a broad, pan-Indian vision capable of utilizing the opportunity. (IPA)

By Nantoo Banerjee

Notwithstanding the Congress party’s election debacle in just-concluded Assembly polls in Uttar Pradesh, Punjab and Goa, the Union Finance Minister, Pranab Mukherjee, must be the most disturbed person at the moment struggling to find right numbers for his 2012-13 budget proposals. The Finance Minister has been proved wrong in most of his 2011-12 fiscal targets based on the prediction of the country’s economic growth rate of nine per cent for the year. Not only that the actual growth rate has fallen short of the target by as much as 25 per cent or even more, but also the government seems to have lost control over its expenditure.
As a result, the current financial year may end up with a record fiscal deficit, anything between 6.8 per cent and 7.5 per cent, compared to the target of 4.6 per cent. This makes the estimation of the 2012-13 budget expenditure a very difficult exercise. The government is so desperate to raise additional resources that within hours of the declaration of the five state election results the Railways indicated the possibility of a hefty 20 per cent freight increase and the public sector oil distribution companies were hinting at petrol price increase up to Rs. 5 per litre.
The size of the 2012-13 budget, which basically means an estimation of the government’s gross expenditure for the year, will be close to Rs. 15 trillion – substantially larger than the original expenditure target for the present fiscal at Rs. 12.58 trillion. The revised expenditure for this fiscal may top the Rs. 13-trillion mark. The continuing high rate of inflation, higher-than-projected subsidies, mid-term spending pressure on the government due to state elections and larger allocation of funds for West Bengal are likely to have caused additional burden on the central exchequer. At the same time, there has been an all-round drop in the government’s revenue collection mainly because of the unexpected economic slowdown.
The widening trade deficit, mid-term fall in the exchange value of Rupee, slow-down in foreign direct investment, rising global petroleum prices, higher NPA fear in the PSU banks and the poor performance of both the primary and secondary markets left the finance minister’s promise of a ‘fiscal consolidation’ unfulfilled. The government also miserably failed in reaching its initial PSU disinvestment target of Rs. 400 billion.
The government’s gross tax receipt for 2011-12 was initially targeted at Rs. 9.32 trillion, including Rs 3.6 trillion as contribution from corporate tax. However, industrial slow-down may have taken a toll on the government’s tax receipts, including corporate tax. The government is most likely to miss the tax-to-GDP ratio target of 11 per cent in 2011-12. Last year, the ratio was 10.4 per cent. The government is most likely to over-shoot its original projection of a lower gross subsidy bill at Rs. 1.44 trillion for the current fiscal. The original estimates put the food subsidy for the year at Rs 606 billion, fertilizer subsidy at Rs. 500 billion and petroleum subsidy at Rs. 236 billion.
Under the circumstances, the government’s gross market borrowing during 2011-12 may have substantially surpassed the original estimate of Rs. 4.17 trillion. Even the net market borrowing target of Rs. 3.43 trillion seems to be an underestimation. A fall in the revenue income did not seem to lead to lower expenditure. The only area, the government may have compressed expenditure is defence. The defence expenditure is likely to fall short of its modest target of Rs.1.63 trillion.
A lower expenditure on defence, which is hardly desirable in the present regional geo-political context, could play a small rescue act to the budget deficit. Of course, there is nothing to be happy about such an act when neighbouring China officially spends over $ 100 billion on defence – almost 300 per cent more than India’s defence spend. The annual share of India’s defence budget in both the GDP and the central government expenditure has of late been declining. In 2011-12, the share of India’s defence budget in GDP was estimated to drop to 1.83 per cent from the previous year’s level of 2.12 per cent.
Pranab Mukherjee, who has spent nearly four decades in the country’s economy management as minister in the union government holding a number of important portfolios including finance under Mrs Indira Gandhi, is an extremely cautious money manager. His wits will be under an acid test this time to lift the economy from the current state of chaos and depression. The biggest challenge before him is to compress the government spending without hurting development and raise both tax and non-tax revenues without hurting business and industry.
The finance minister needs the support of business, stock market, foreign direct investors and, more importantly, of the opposition political parties as well as of his party’s allies in the UPA government in fresh reform initiatives. The last part would be most crucial to his 2012-13 budget proposals. The country will need a lot of investment in new projects and development to clock a rapid economic growth. Projects need to be cleared at faster pace. Mergers and acquisitions must be concluded without unnecessary delays. Projects and M&As worth over Rs 2 trillion are pending government clearance for nearly five years, more for political than administrative reasons. If these projects are allowed to take off in 2012-13, it will make Pranab Mukherjee’s task of generating revenue resources a lot easier. This looks more doubtful after the UP and Punjab state elections.
Unfortunately, there is little the finance minister can do to cut down government subsidies especially in areas such food and fertilizer, which account for nearly Rs. 1.2 trillion. But, he can do away with the rural employment guarantee programme, which is proving to be a huge national waste. The fund for this controversial programme can be better utilized in other more visible rural and urban welfare schemes, including healthcare and social infrastructure. The expenditure side will require an intense scrutiny to prevent wastage and allow only what is a must. The revenue department must be geared to prevent leakage, plug procedural loopholes and check corruption.
The budget formulation for 2012-13 is going to be a real tightrope walk, especially under the latest political scenario. There is hardly much opportunity to needle with indirect and direct taxes. Some minor changes in indirect taxes may help the government to mop up only two to three billions of rupees. A single per cent additional economic growth will generate several times larger indirect tax revenue. As for the direct tax, the corporation tax is unlikely to be disturbed. The compliance of property tax, capital gains tax, value-added tax, etc. is more important than the tax rates. There is a definite case for raising the personal income-tax exemption limit for individual tax payers. Even in this highly middle-class pleasing exercise, Mukherjee may not provide beyond minor benefits to tax payers. The exemption limits may be raised only by 15 to 18 percent in each of the four categories – individual citizens, women, senior citizens and those above 80.
Beyond this, there is little that one can speculate about the coming union budget, which may disappoint those expecting much. Honestly, the finance minister is not in a position to give away or take away much in the process of his budget balancing act. The forthcoming budget session of Parliament is likely to be even more stormy than the last one. It may prove to be an acid test for the government for its very survival. (IPA)

By M K Dhar

Denied basic human and democratic rights for decades, the long-oppressed people of Baluchistan, Pakistan’s largest province bordering Iran and Afghanistan, have succeeded in attracting international attention by having the issue discussed in a US Congressional committee. The statement by several Congressmen supporting the Baloch demand for independence from Pakistan and tabling of a resolution to that effect have violently shaken the military-cum-political establishment in Islamabad and further soured US-Pakistan relations. In retaliation, Pakistan intelligence agencies are killing Baloch nationalists and prominent tribal leaders in a way that resembles what happened during the 1971 revolt in erstwhile East Pakistan (now Bangladesh) that led to the birth of a new nation.
Through the decades successive military and civilian regimes in Pakistan have tried to suppress by military force the demand for self-determination of the people of Baluchistan — the most exploited and least developed province but have not succeeded in their mission. The first insurgency broke out in 1948 to resist the illegal and forcible annexation of Baloch-dominated Kalat State with Pakistan. The idea of Pakistan never attracted its secular and freedom-loving people and Islamabad adopted a multi-pronged approach to deal with the revolt. Apart from brutal military operations in 1948, 1958, 1962, 1973 and 2002 to quash the rebellion, it adopted political and economic means to sideline the people. The province provides Pakistan its natural gas and oil and precious metals like gold, which are being fully exploited without giving any benefit to the people, who were denied basic social services like healthcare and education and suffer from abject poverty and the lowest literacy rate.
The Baloch have been systematically denied representation in the Army, federal services, profitable corporations, customs, railways and other key government institutions. The province has been run by the Pakistan Army Corps Commander and Director General of Frontier Corps, who by-pass the chief minister while taking decisions. The intelligence agencies have remained active in manipulating elections (as in the rest of Pakistan) to the National Assembly and provincial legislature in order to keep out “undesirable” elements. A state of terror was created through repeated and brutal military operations, which have taken the lives of thousands of nationalists, as well as, soldiers battling them; establishing military checkpoints to harass the people and restrict their movement and denying access to the media to suppress the facts about the sufferings of the people. Local as well as, international human rights orgnisations have been barred from inquiring into the plight of some 5,000 “ missing persons” and existence of over 200,000 internally displaced people in Balochistan.
The Government has been engaged in systematic target killing of Baloch nationalist leaders including Nawab Akbar Bugti, against whom a full-fledged military operation was conducted; Balach Marri, Ghulam Mohammad Baloch, chairman of Baluchistan National Movement (BNM); Baloch Students Organisation (BSO); Balochistan Liberation Army, Baloch Republican Army and Balcoh Liberation Front. Though some of the moderate parties announced a cease-fire in 2008, the Pakistan Government refused to concede their demands, such as, withdrawal of security forces form Balochistan, release of thousands of political prisoners and “missing persons” (if not already killed in custody) and end to construction of more military cantonments as confidence building measures, but, the PPP government refused — bowing to military pressure — to concede any of these demands and continued to whisk away political workers and target killing of leaders.
Last month the wife of a Pakistani MP Zamur Domki and her 12-year old daughter were murdered in broad daylight in Karachi. Baloch politicians allege that the murders were carried out by Pakistan’s intelligence services to send a message to Ms. Domki’s brother, Brahmdagh Bugti – grandson of Nawab Akhar Bugti — who, from exile in Geneva, leads the region’s largest secessionist party. Last month the Human Rights Commission of Pakistan has reported over 110 cases of enforced disappearances who were increasingly turning up dead. Baloch leaders have, once again, called for action, but without state response though the United States Department and Congressmen have expressed concern over denial of fundamental rights of the Baloch people and their right of self determination.
In the US Congressional sub-committee hearing Dana Rohrabacker, who also tabled a resolution, Louie Gohmert, Ted Poe and others sought Balochistan’s independence from Pakistan and expressed anguish over the misuse of American weapons against Baloch nationalists, who have been waging a struggle to get their democratic and fundamental rights. Ralph Peters, a retired Army officer and author said it was an “incontrovertible fact” that Balochistan was “occupied territory” which had never acceded to Pakistan and now does not want to be part of that country. Tad Poe defended the right of the Balcoh people “to separate themselves from an abusive government”. The Baloch had suffered at least five deadly military operations by the Pakistan Army since their “illegal and forcible occupation” by Pakistan in 1948. The Baloch blame Pakistan’s dominant Punjabi ethnic minority, who outnumber the rest of the communities in the Army, bureaucracy and civil and foreign services, for exploiting their natural resources for their own benefit without compensating the local people in any — way in cash royalties or economic development.
The result is that the situation remains as explosive as ever, with resentment against the government and secessionists feeling growing and the nationalists being forced to target troops and sabotage gas and oil supply lines and killing soldiers and Frontier Constabulary. Even now the Army is conducting operations against the insurgents in Balochistan, which presumably motivated some US Congressmen to take up the issue of the right of self-determination of the Baloch people and gross human rights violations against them committed by the security forces and intelligence agencies. Brahamdagh Bugti insists that the Pakistan Government does not believe in discussing the issue of Balochistan’s rights and is one with the Army in suppressing the freedom urge of the people. The Army, however, makes deals with Jihadis and fundamentalists who are targeting US and NATO forces in Afghanistan and some even killing Pakistanis themselves.