First, the good news. The Union government finally seems to be getting its act right on finding money for social sector spending without borrowing and adding to the fiscal deficit. The cabinet’s decision on Thursday to uniformly offload at least 10% equity from profit-making public sector units clearly points in that direction.
Here’s the bad news: The money from disinvestement will not be routed through the national investment fund for the next three years. This is the second time when a rule-based system, devised by the government, has been abandoned due to political exigencies. The first instance was that of holding the Fiscal Responsibility and Budget Management Act-mandated deficit targets in abeyance earlier this year.
There is no doubt that India has faced—and will face in the future—difficult economic and political conditions. That does not mean that carefully crafted laws and rules should be swept aside, even for a short time, at the mere appearance of a problem. That affects the country’s credibility. That’s dangerous.