With UPA-II credibility at its nadir and a mid-term existential crisis, the Prime Minister Dr. Manmohan Singh, more sinned against than sinning, has refurbished his Cabinet, which does little to inspire confidence that things would be different from now on. Dr. Manmohan Singh, who stands tall for his integrity, is no longer the mover and shaker of things as he did in transforming the economy in 1991 with an enabling head in the then Prime Minister Mr Narasimha Rao.

Let alone the burst of scams which tainted UPA-II, the Manmohan Singh Government could have given a better account of its performance on the economic front addressing gut issues of providing public goods and delivering services effectively in an environment of relative price stability. Its stark failures to tame inflation for over two years had dented its image already before it had to face the wrath of civil society over the litany of corruption cases. It had been following the easier route of placating India INC as the driver of growth while agriculture was largely left to vagaries of weather. With no focus on agricultural productivity, India’s food economy drives inflation.

Whatever UPA’s legislative record on rural employment guarantee or rights to information or education, its malady has been to regard mere legislation and policy announcements as successful accomplishments, no matter whether all intended benefits of all programmes reached the yet-to-be-defined ‘aam admi’. UPA-II simply revelled on growth, no matter the high inflation hitting more than two-thirds of India, though less painful for the organized sector – industry and services, MPs and the well-paid civil servants.

The Prime Minister claims the latest reshuffle – the last before 2014 –addresses balance between states, considerations of “efficiency and continuity” and “trust deficit”. Plainly, the exercise has turned out to be colourless and smacks of certain adjustments intended to help the Congress in state elections ahead, notably UP. Coalition compulsions left the increasingly unsafe Railways again in the hands of another TMC nominee, Mr. Dinesh Trivedi and he would take due note of whatever his leader Ms. Mamata Banerjee, would deem necessary for West Bengal.

And similarly two Cabinet berths left vacant for Mr Karunanidhi to name, at his convenience, replacements for the two disgraced DMK ministers Mr A Raja and Mr Dayanidhi Maran. The DMK supremo, angered over the treatment meted out to his partymen and daughter Ms. Kanimozhi MP under the present dispensation, and still smarting from the shock defeat of his alliance with Congress in the Assembly elections, will take decisions for the future at his party executive meeting in the third week of July.

Even within the Congress, there are malcontents after the reshuffle. One of them, Minister of State with independent charge Mr Gurudas Kamat has resigned apparently not satisfied with the portfolio or the status given him. Notable shifts include some upgrades and downgrades. Mr Jairam Ramesh, Minister of State for Environment, becomes Cabinet Minister for Rural Development, a challenging charge, though his earlier stint did not gain him kudos for his “no go” policy bringing some projects to a standstill. While gently “kicking” him upstairs, the Prime Minister divested Mr Veerappa Moily of the law portfolio, entrusting it to Mr Salman Khurshid. This is linked to the embarrassments to Government in the Supreme Court during the tenure of Mr Veerappa Moily, who will now hold charge of Corporate Affairs. Mrs. Jayanthi Natarajan, the Congress spokesperson, will be the new Minister of Environment and Forests.

The Cabinet reconstitution is just one step on the rocky road that UPA-II has to traverse between now and 2014 when it would face the electorate. It has still to get to grips with the monster of corruption and black money, tame inflation at least from now on, and salvage the slowing economy. The top economists in the Government including the Prime Minister himself keep talking only of 9 to 10 per cent growth which, they presume, would help to alleviate poverty at some distant date.

It is high time for Government and the Planning Commission to rethink the strategies pursued so far and bring into greater focus programmes which directly benefit the rural poor and urban under-class. Chanting “inclusive growth” ad nauseam is meaningless so long as Government cannot tell us in concrete terms what growth has produced in terms of decent wage employment and other outcomes of flagship programmes.

The Finance Minister Mr Pranab Mukherjee and the Reserve Bank of India have to make sure that the current slowdown in industry is reversed but not without bringing inflation under control. Mr Mukherjee is still hopeful of the economy registering around 9 per cent growth in fiscal 2012 and maintaining the fiscal deficit at the targeted 4.6 per cent of GDP. Oil price revisions are working through the economy and more adjustments are indicated which would harden the battle against inflation. It is no use drawing petty comfort from weekly changes in the food price index and assuming that the worst is over. Global food and oil prices are still volatile.

The inflationary situation is India's most significant near-term macroeconomic challenge, according to the Reserve Bank. The official expectation is that the WPI now over 9 per cent, would come down to 6.5 per cent by March 2012. In addressing medium-term problems, Government has to take note of the pertinent observations of RBI Governor Dr Subbarao about reliability of official economic data and the need to turn the present “jobless growth” into a pattern of sustainable development of manufacturing and agriculture in order to reap the demographic dividend.

BJP has been pinpointing all the policy failures and targeting some of the Union Ministers after its unrelenting attacks on the Prime Minister himself. Government must look to the interests of the people, especially those self-employed without its support, before rushing to adopt more free market policies including FDI in retail trade which would wipe out millions of small traders in urban and semi-urban areas. The Food security bill, from the National Advisory Council, to go before the Cabinet, seeks to extend coverage to a wider swathe of population so that they get the benefit of lower cereal prices than the current market rates.

Government will face stern tests in the monsoon session of Parliament opening on August 1. Apart from the most contentious legislation including those on Lok Pal and land acquisition, the heavy agenda includes laws on food security, mining and financial sector reforms. One way of sounding more credible is to present an Approach paper for the 12th Plan (2012-17) with reinforced priorities – agriculture, land, water, urbanization and infrastructure and mechanisms to make “inclusive growth” a reality.(IPA)