Government has also to be increasingly in tune with the aspirations of growing numbers of youth as India undergoes the process of demographic transition. The new Council of Ministers, which was being put together by the Prime Minister on the President's invitation, was expected to project a blend of experience and youth. The 20-member Cabinet sworn in on May 22, in the first instance, and the allocation of key portfolios reflected a workmanlike approach to face the tasks ahead.

Effective governance and inclusive development have to be the watchwords for the new Congress-led alliance with thrusts for economic revival and social advance. The greatly empowered Congress must ensure cohesive functioning of Government at the highest level so that visible results can sustain confidence and political support over the next five years.. There can be no return to 'business as usual' approach and there should be benchmarks of performance. The first gain for the polity is greater stability at the Centre than at any time in recent years including the BJP-led NDA rule of 1999-2004 and UPA's own first term (2004-09).

The President Mrs. Pratibha Patil's address to Parliament on June 4 will outline the immediate and medium-term tasks of Government, especially the economic policy measures to bring about economic recovery and restore growth as well as the broad approach of Government in regard to recent developments in South Asia and also in the wider international arena where India's role as both a regional and global economic power is highly assessed.

Putting together a new Council of Ministers with due representation for its poll allies has not been as smooth as was expected in a vastly changed situation. This was mainly due to DMK leader Mr Karunanidhi's insistence on accommodating at least eight of his party members with four Cabinet berths and as many at the level of Ministers of State (MOS). Among them are his newly elected son, Mr M K Azhagiri and daughter Miss Kanimozhi, now a member of Rajya Sabha. The Congress looked for a more reasonable proposition. given the Prime Minister's keenness to reorganise Ministries and provide a new look to his Government. Unyielding, Mr Karunanidhi announced that his party would extend outside support to Government and returned to Chennai, least bothered as to what image he was creating for himself in the process in the rest of the country..

In 2004, Mr Karunanidhi, the “trusted friend”, had created similar tantrums. With Congress and Dr Manmohan Singh continuing to hold the olive branch. wiser counsels prevailed with Mr Karunanidhi finally agreeing for DMK participation with three Cabinet berths and four posts of MOS for his nominees. On the other hand, Mr. Karunanidhi has been effectively guarding his turf rejecting the state congress leaders request for power-sharing in Tamil Nadu where the minority DMK Government has to rely on the 35-member Congress support.

Relatively, the Congress has had fewer problems from other allies. Ms. Mamata Banerjee, the Trinamool Congress leader, given the portfolio of Railways, appeared to be more reasonable by not demanding more Cabinet berths but only six MOS. Mr Sharad Pawar, who retains the umbrella portfolio of Agriculture and Food, would also like greater Cabinet representation for his NCP, keeping perhaps in view Mr Praful Patel who has energetically handled civil aviation. But there are far more Congress MPs from several states besides UP, where the party significantly gained in the elections, hoping for Ministerial berths.

Welcoming stability at the Centre, India Inc. is pushing hard for economic reforms, given the attention it commands with both Government and the media. Both the Government and industry favour early completion of the financial sector reforms embodied in the earlier legislation which could not be adopted in the face of Left resistance - in the banking, insurance and pension sectors. This may be taken up among the urgent legislative measures of the new Government. But what are needed are more of policy measures which would help to improve investment, re-vitalise agriculture and accelerate the pace of industrial development. India is yet to master a growth pattern, which rightly balances efficiency and equity. Government has thus to make a calibrated approach to reforms giving priority to those which would go to raise incomes and jobs rather than merely aim at opening up the economy further.

The new Finance Minister, Mr Pranab Mukherjee can be expected to bring to bear his vast experience upon government and make a pragmatic approach in policy-making. His immediate preoccupation will be with the finalisation of the Union Budget for 2009/10, for which he had presented tentative estimates in the Interim Budget on February 16 last. Faced with the enormous challenge of returning to a sustainable fiscal balance in the foreseeable future, there would be no room for more tax concessions or raising of exemption limits as are being mindlessly suggested.

One immediate option to offset at least a part of the additional outgoes needed for social sector programmes is to go back to disinvestment, selectively but on a significant scale without diluting Government's majority holding (51 per cent). The other area is to let well-performing public enterprises raise sizeable amounts of debt in the market for capacity expansions, especially in infrastructure, to accelerate the pace of development. IPOs or debt issues, however, depend on the equity market conditions, which are again a reflection of global market sentiments. There is also need for greater bank financing for both productive sectors, large and small, and for project-oriented term loans.

The massive borrowings of Government, especially since 2008/09 and projected at over Rs.330,000 crores in the interim budget for the current year, would limit the ability of banks to finance freely and also have the effect of crowding out private investment. In an attempt to reverse the investment slowdown, Government and RBI acting together would bring about further reduction in lending rates. Let alone interest rates, business confidence has not been high since the later half of 2008/09. Recently, some sectors (like automobiles) exhibit signs of recovery. Industry may need a pick-up in demand, domestic and external. This has to do with both fiscal stimulus to an extent possible and pattern of growth.

The Indian economy is currently growing at a 5 to 6 per cent rate of growth, and at any rate in the first half of fiscal 2010, few signs of output or export revival are expected. There would thus be a fall in the growth of revenues while reserves have ceased to grow since last year. Government economists talk of a recovery in the second half and growth hitting 7 per cent, but it is linked to global recovery which is not expected until well into 2010. This must be factored in the planned stimulus measures in the forthcoming Budget which will also reaffirm government's determination to return to fiscal responsibility within a time-frame. (IPA)