FUTURE PLAN Civil Aviation, Mines, Coal and Power sectors may see reforms

Jun 16 2014 : The Economic Times (Kolkata)

Balancing Expectations & Realities?

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FUTURE PLAN Civil Aviation, Mines, Coal and Power sectors may see reforms

Prime Minister Narendra Modi's attempt to rein in his supporters' soaring expectations by talking about tough, unpopular, decisions to revive the economy has left his own party speculating about the direction of his government's first budget early next month.While one section of the BJP leadership points towards the possibility of curtailing petroleum subsidy, a senior BJP functionary explained that Modi's attempt was to make his cadre base realize that the impact of inflation and high food prices cannot be reversed overnight. The leader said that personal income tax sops that are being widely expected and speculated can lead to serious revenue losses which the government cannot afford at this juncture.
The middle classes expect tax relief that will leave more money for them to spend, but the BJP functionary pointed out that without the economy growing it will be difficult for the government to let go of its scarce accruals. “I am well aware that my steps dent the immense love that country has given me. But when my countrymen would realize that these steps would result in getting the financial health back then I will regain the love,“ Modi had said at Panaji on Saturday .
But all leaders do not accept that this implies cutting subsidies that will immediately pinch BJP's middle class support base. “Petroleum subsidy is an issue that needs to be tackled, but at what cost? Very soon, we will have elections in Maharashtra and Haryana. We need the euphoria to continue the whole of the first year. But at the same time we need to take tough measures. So, Modi is trying to balance expectations and reality,“ said a BJP functionary .
The crude oil prices are increasing with the situation in East Asia turn ing worse by the day . But even if oil companies are forced to bear the brunt of the rising prices, the middle classes have been expecting a climate of large investments and great spending.
“The situation is too grim to offer too many concessions. But the government can still offer some concessions. It is left to the finance minister and the PM to decide whether to offer concessions to the corporates or directly to the voters and the middle classes,“ said a BJP leader.
But going by the PM's statement those who have been awaiting good times will have to wait a little longer.
He had said that, “taking decision and strong decisions in the coming one or two years needed to bring financial discipline, which will restore and boost the country's self confidence.
To spruce up the Railways, which has been ailing due to populist steps taken by previous Railway Ministers, the government is likely to take corrective measures. This may include hike in fares, for cutting down on initiating plans for cutting down on employee strength in the near future, privatizing certain services and so on. “Tough measures in various ministries can be taken only in the beginning of the five-year term of a government. This is the right time to end the policy paralysis and lack of governance of the Manmohan Singh government,“ a union minister said. The percentage of GDP spent on defence and Human Resource Development is likely to go up, according to sources.
HRD Minister Smriti Irani has already demanded that her ministry should be given more funds.
Civil Aviation, Mines, Coal and Power sectors, which have been in the news for all the wrong reasons during the UPA regime, may see farreaching reforms.