How Finance Ministry walks the talk on difficult issues

These are tough times for economy managers, and it is possible to get overly alarmist. It is also possible to underestimate the impact or importance of measures already undertaken — the rush of bad headlines can create the illusion that little is being done, when the more nuanced picture is that news would have been worse in the absence of earlier actions. Large parts of the UPA government are advertisements for indifferent governance, but since late last year, North Block has walked the talk on many difficult issues. That’s why despite a ruling political coalition that loves fiscally expensive giveaways, we have seen North Block-guided fiscal containment measures. To continue, North Block now needs political support from the top. That the bogey of fuel subsidy is more than half-dead, with even diesel prices now subject to incremental revisions, is also a big recent positive. As is the Cabinet Committee on Investment — one had almost given up on the UPA clearing any project, but some projects have been cleared. And where the courts are over-interpreting their mandates and deep-freezing projects, there’s little the government can do.

Headline inflation has moderated, although food inflation remains high. But the food inflation problem is structural and beyond North Block’s direct policy control. It is also a problem created by the food minister, who sits on nearly 80 million tonnes of grain when grain prices keep rising.

Sure, more could have been done. And it’s not too late. The UPA has time to act, and, of late, acquired political stability with which to take steps to revive confidence and growth. Allowing stock market participation of India’s huge domestic savings corpus that’s locked in provident funds can change market dynamics. That one act will revive investor confidence, and if followed by measures to deepen and widen the currency market — more trading options, longer trading hours — the currency will get a vote of confidence, too. Since September last year, North Block has done a good job of managing a tough situation. It’s possible to up the game even more.