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UPA govt turns on the populist tap

On Tuesday, the government gave its go-ahead to the constitution of the Seventh Pay Commission, which is expected to significantly increase the pay packages of central government employees. And going by precedents, it would also result in another round of salary increases even for state government employees. Photo: MintPremium
On Tuesday, the government gave its go-ahead to the constitution of the Seventh Pay Commission, which is expected to significantly increase the pay packages of central government employees. And going by precedents, it would also result in another round of salary increases even for state government employees. Photo: Mint

Unlike its 2009 efforts, the UPA this time is targeting specific demographic segments in its pre-poll push

New Delhi: The Congress-led United Progressive Alliance (UPA) has unveiled a rash of populist measures in recent weeks and months, presumably with an eye on the coming general election.

With the UPA facing the effects of a strong anti-incumbency sentiment—it has been in power since 2004—and opinion polls predicting the worst, the Congress party is understandably desperate to revive the feel-good factor among the electorate.

Unlike in the run-up to the 2009 polls, where the UPA was helped by the largest-ever farm loan waiver in Indian history (of around 70,000 crore), this time, it is targeting specific demographic segments, rural and urban women, farmers, minorities, even white-collared workers.

Sample this: an increase in the number of subsidized cooking gas cylinders per household to 12 from nine per year; including the Jain community in the minority communities’ list; special education schemes for Muslims worth 1,600 crore; the implementation of a 2013 budget promise to provide loans to rural women’s self-help groups at rates on a par with loans to farmers (7% per year); and plans to bring minimum wages paid under the government’s flagship rural employment programme on par with the minimum wages fixed by the states for agricultural labour.

On Tuesday, the government gave its go-ahead to the constitution of the Seventh Pay Commission, which is expected to significantly increase the pay packages of central government employees. And going by precedents, it would also result in another round of salary increases even for state government employees.

Kunal Kumar Kundu, vice-president and India economist at Societe Generale said political compulsions ahead of the general election are forcing the government to take the populist measures at the price of economic reasoning.

“By forcing public sector companies like Coal India to give higher dividends and postponing oil subsidy payments for next fiscal, the government is pulling income from next year while pushing the expenditures to next fiscal which could put the next government in a difficult situation," he added.

Political analysts too are not convinced that the UPA, which has seen its image battered by a raft of corruption scandals and its governance record dented by its inability to contain inflation, will derive the desired political gains from these populist initiatives.

The motives (behind the announcements) are “too obvious" said N. Bhaskar Rao, chairman of the Delhi-based Centre for Media Studies. “Good initiatives lose their goodness when they are seen to be linked to the elections. The measures seem reactive, being announced in reaction to the upcoming elections, which make people wary and make the measures lose the punch they otherwise would have had."

According to Rao, most of the initiatives announced would need time to trickle down to the people they are intended for. Unveiling sops so close to the polls, expected in April-May, “is unlikely to benefit the government", he added.

The Congress-led UPA first came to power in 2004 on a pro-poor platform. In the five years to 2009, when it completed its first term in office, it notched up an impressive list of pro-people legislations—including the laws that enabled the right to information and guaranteed employment. In 2008, it announced a farm loan waiver scheme that cost the national exchequer an estimated 70,000 crore.

Some of these helped it return to power in 2009.

“During the UPA’s first term in office, the government passed some landmark legislations like the RTI Act, the rural jobs scheme. These were passed within the first two or three years of the UPA coming to power. So the coalition government was able to reap the benefits of it when it went to the polls later. The government was able to take ownership of these measures," said Himanshu, an assistant professor at Jawaharlal Nehru University (he uses only one name).

By contrast, “in the UPA’s second term, the government is seen as confused about what it wants to implement," he added.

In its second term, the UPA has battled allegations of corruption surrounding the organization of the 2010 Commonwealth Games, the allocation of the second generation (2G) spectrum, and the allotment of coal blocks.

According to Himanshu, these resulted in policy paralysis , and made the UPA’s second term seem less pro-poor and more crony-capitalist.

Results to elections in five states in December which saw the main opposition Bharatiya Janata Party win power in three and the untried and untested Aam Aadmi Party ousting the Congress party from power in the fourth, gave a severe jolt to the UPA.

“In the last few months, the Union government has been overactive to announce these measures because of the upcoming Lok Sabha elections. There is no doubt about it," said Nirmala Sitharaman, BJP spokesperson.

“I do not think what the opposition is saying is correct. The UPA is looking to do more and more good for the people," said Shobha Oza, a Congress spokesperson.

That desire to do good
may come to nought in the hustings, according to Himanshu.

“Populism by itself doesn’t get you votes. What is needed is clarity on broader economic policies, a broader economic vision," he said.

Anuja and Gyan Varma contributed to this story.

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