The programmes outlined in the President Mrs. Pratibha Patil's address to the new session of Parliament (June 4) are mostly aimed at extending and consolidating the ongoing rural employment guarantee, education and other social welfare programmes for a wider and more effective reach to benefit the people, especially the poorer sections.

Indeed the Government has taken the electoral verdict as a vindication of its earlier policy approaches and regards it as “a mandate for inclusive growth, equitable development and a secular and plural India”. There may be questionable assumptions of what the verdict was all about but there was no doubt the Congress leading the government at the Centre emerged significantly stronger. But the post-election UPA would still need support from parties which had pledged “unconditional support” from outside, in promoting major pieces of legislation, given the vagaries of regional parties with their own agenda.

The President's address has raised greater expectations of this Government fulfilling the promises made, than at any time in the past, with mechanisms to overcome the endemic gaps between promise and performance. The UPA Government will now face critical tests of performance in creating effective delivery mechanisms and ensuring its own credibility.

The expectancy is heightened by the Prime Minister's note to the Finance Ministry made public, in unusual way, that the forthcoming Union Budget should “adequately and appropriately” reflect the priorities and programmes outlined in the President's address to Parliament. Restoring the growth momentum of the economy, from the current slowdown, will take precedence and it will not be easy to get back to high growth without global recovery. It was global economic expansion till mid-2008 that enabled emerging economies including India and other developing countries to record faster rates of growth. A return to an 8 to 9 per cent growth is thus contingent on advanced economies coming out of recession and on the global financial system becoming functional to spur an economic upturn.

Meanwhile, the Budget is expected to address problems related to sectors affected adversely from the global slowdown, such as small and medium enterprises, exports, textiles, commercial vehicles, infrastructure and housing. According to the President's address, this must be accompanied by measures to achieve a counter-cyclical expansion in public investment in infrastructure. Given the critical constraint in financing such investments, with due regard to a medium-term strategy for prudent fiscal management, the reference to some innovative steps in the Address could only mean at present a recourse to disinvestment in public enterprises on a substantial scale without breaching the Government's majority share-holding of 51 per cent.

Again expansion and modernisation of infrastructure is one of the key focus areas for the next five years. To attract private participation in infrastructure on a partnership basis, regulatory and legal framework is to be made investment-friendly. It is unlikely that the Budget would unveil any sizeable programmes on disinvestment or infrastructure. More resources are to be channelled to the flagship programmes and the five-year Bharat Nirman. The achievements under the latter plan in providing basic infrastructure of roads, electricity and telephone in relation to targets set are yet to be spelt out.

Undoubtedly, the National Rural Employment Guarantee Programme (NREGP) is a success story and the Government will now enlarge the scope of works undertaken under it so that it does not remain a mere social safety net but helps to create durable assets such as improving land productivity. With massive allocations for this country-wide programme, independent monitoring mechanisms to ensure public accountability are to be set up at the district level. Governance reform is at the core of problems besetting the Government which has to render a better image of itself than in its earlier 'avatar'.

While the Government has talked of maintaining high growth with low inflation, particularly in relation to prices of essential agricultural and industrial commodities, the wholesale price index at below one per cent does not reflect reality. Prices of foodgrains, especially rice and of manufactured food products such as sugar have remained excessively high and the consumer price index is still 8 to 9 per cent higher. The price disparities would get wider if the budget begins to implement the promise to provide rice or wheat at Rs. three per kilogram for people below the poverty line.

This apart, a resurgence of inflation during the latter part of the year cannot be ruled out from the global trends in commodity prices, particularly oil which recently moved up to 70 dollars a barrel and would harden with a pick up in demand as economic recovery gets under way in leading countries other than the recession-hit developed economies. Revival of demand as a result of the stimulative packages and high levels of deficits would be adding to potential inflation.

Certainly, for this Government some areas are relatively easier for accomplishing results. Reforms in governance are put down as one of the focus areas over the five-years but what business and investors want are a different set of reforms which are projected as the key to high growth of the economy, and which are covered in the President's address.

Apart from disinvestment, banking, insurance and pension reforms will be taken up. Government has announced it would recapitalise public sector banks to strengthen their financial position and enlarge their lending role. A regulating authority would be created for the pension sector.

Coal and power are two areas where policy liberalisations would be undertaken with a sense of urgency. To ensure that 13,000 MW is added to generating capacity each year, measures to be taken include provision of open access. All these may get through ahead of the promised accountable mechanisms on NREGP and other flagship programmes. Given the still low human development index of India, much more needs to be done on the literacy, health and basic services fronts where again outcomes of increasing allocations are yet to become transparent.

Foreign direct investment inflows would be further encouraged through an “appropriate policy regime”, especially in the context of unsustainable fiscal deficits. Tough options to limit deficits would have to include a sharp reduction in the total subsidy outgo in the budget, currently at well above Rs.100,000 crores. One is to let the market determine retail prices of petrol and diesel, in the first instance. In other oil products and food and fertiliser subsidies, Government sees the need to create a national consensus on targeting subsidies to the truly poorer sections.

Loss of revenue buoyancy with the economic slowdown would limit Government's freedom in increasing the overall size of social sector allocations in the forthcoming budget. Hard choices would get reserved for the next year which would see the introduction of the nation-wide Goods and Services Tax. With most of governance and other reforms put down as priorities “over the next five years”, the focus in the first 100 days is mainly on the empowerment of women through the bill to provide one-third representation in state legislatures and Parliament, 50 per cent of membership in panchayats and urban local bodies, and increased numbers of women in central government jobs. (IPA Service)