For far too long now, the Vajpayee government has been accused of inept political management of economic reforms. But with the manner in which the government handled the concerted demand for roll back in food subsidy cuts announced in the last budget, such accusations should finally be buried for good.
The clamour for a rollback came from virtually all quarters. The Opposition, led by the Congress, wanted the restoration in the cuts in food subsidy. It was a rude jolt for many within the Congress party, which had been in the forefront of economic reforms in the nineties, when the Narasimha Rao government had initiated moves to reduce food and fertiliser subsidy cuts with partial success.
There were the allies of the National Democratic Alliance (NDA) like Chandrababu Naidu of Telugu Desam and Mamata Bannerjee of Trinamool, who were equally vociferous in their demand for a rollback.
Even within the Bharatiya Janata Party (BJP), senior party functionaries like vice-president Madan Lal Khurana made public their opposition to the finance minister's move to cut the subsidy bill.
Finance minister Yashwant Sinha's initial response to the demand for a rollback was very defensive. On many public fora, Sinha said he was not the only finance minister to have rolled back the measures announced in the budget.
Sinha also indicated that if the demands were genuine, he would look into them. Implicit in these responses was the suggestion that Sinha was keeping all options open.
If political pressure for a roll-back became difficult to resist, he was prepared to give in. Prime Minister Atal Bihari Vajpayee gave credence to such an interpretation. He told a gathering of business leaders that reforms could not be divorced from the political reality.
This was interpreted as a clear hint that the Vajpayee government had settled for a rollback of such measures that might have meant a greater financial burden for the people.
And when Madan Lal Khurana made public his letter urging the government to go slow on reforms that hurt the poor people, it seemed the consensus against reforms was finally complete.
The mood changed suddenly with Vajpayee acting against Khurana. The BJP vice-president was summarily removed from the party position.
By this time, the Opposition's plank for resisting the food subsidy cut had been appropriated by BJP leaders like Khurana. The opposition parties and even the NDA allies had almost reconciled themselves to the idea that a rollback was inevitable. But the removal of Khurana from the vice-presidentship of the party took them by surprise.
The action against Khurana was seen as a tough message to one and all that the Vajpayee government was firm on the food subsidy cut. The reply to the debate on the finance bill was due within a week of Khurana's removal.
Even before the Opposition could realise that the Vajpayee government was not going to accept the demand for a rollback, the finance minister announced a host of market-friendly measures that buoyed up the sentiments on the stock exchanges. The mood had turned positive.
A day later, Sinha announced that he would refer the question of better targeting of public distribution system for food items to the newly set up expenditure committee. That seemed to be enough of an assurance for the budget to be passed by the Lok Sabha without any rollback of the food
subsidy cut.
In retrospect, it appears that the government may have deliberately given initial indications that it might buckle under the pressure for a rollback.
This seems to have been part of its overall political strategy to avoid a confrontation with the opposition forces on such an issue and yet salvage the budget without any rollback.
