Saturday, November 3, 2012

Haha….Mamata now OK with her government taking “foreign” loan!

Media reports indicate that Mamata Banerjee has agreed to certain “onerous” conditions from the ADB (Asian Development Bank) while accepting a $400 million loan from it. The onerous conditions are a commitment to increase taxes, no less! Unbelievable how the stormy petrel of West Bengal has so quickly had to eat humble pie. The last bastion against anything foreign, this “revolutionary” sure has had to madk a quick 180 degrees U-turn!

But then this is classically what happens to rebels who spend a life time doing nothing but opposing authorities and governments, no matter which party the governments belongs to. Mamata has been a part of both the NDA and UPA, and she has given much pain and embarassment to both coalitions. Even while she was in the Government, she was most at ease when opposing something the Government proposed, rather than in proposing something of her own. For the record, she’s opposed any fare increase in the Railways (in fact, she sacked her Railways minister when he dared do that), any increase in petrol prices (even though it doesn’t hurt the poor) and any increases in diesel prices as well (because it hurts the poor). For Mamata to agree to increasing rates of taxation in her state after opposing every rate hike at the Center is a complete volte face. And a farce. How will she reconcile her opposition to the Central government’s actions with her own?

What such people as Mamata forget is that reforms in India have always happened in the backdrop of some or the other crisis. They have never been voluntary. The reforms of 1991 happened in the background of the well known forex reserves crisis. And more recently, the reforms of September 2012 have happened in the background of Indian bonds being relegated to “junk” status. In-between, during UPA-1 and during the NDA regime before that, reforms were slow and staccato – mostly because India was doing just fine without them. When Mamata faced her own financial crisis in Bengal, her first reaction was to pester the Central government into giving her a “special package”. Basically, a re-structuring of the debt already taken and a deferment of the interest charges for three years. This would have been a political masterstroke had she succeeded. She would have claimed that she managed to protect Bengal without increasing any rates or taxes. Unfortunately, such sugar candies are hard to get in real life. The Center has its own troubles; if it has to expend such luxuries, it might as well demand political loyalty in return. Hence UP it is that got what could have been Bengal’s!

So now Mamata Banerjee will increase taxes in her state. Just look at the irony of this. The one who opposed even a small hike in railway fares – and those fares have not increased for nearly 10 years – has agreed to increase taxes, the most difficult of all difficult decisions to undertake. Even the Central Government has almost never increased taxes in the last twenty years. Mamata will perhaps be the only CM to increase taxes on her people. The one who demanded that the Central government cut customs duties on imported petroleum so as not to have to increase retail rates has now agreed to actually increase taxes in her state. This is really funny! At last, Mamata is getting some lessons in economics finally!

She will probably now understand why her predecessor Buddhadeb Bhattacharya was not such a bad guy after all. In fact, he was miles ahead of her in his thinking. By wooing industrialists, and by encouraging FDI in some ways, he was trying to move his party out of the deep dogmatic freeze it had fallen into. Had it not been for Mamata, he would have succeeded, and Bengal might have progressed. However, that was not to be. Mamata attacked him every which way; abused his “capitalistic” leanings (though it could hardly be called that) and the Left Governemnt learnt the lesson. The wrong lesson. That reforms were bad. People of Bengal can continue to suffer, but no Government of Bengal will ever again seek private capital. Definitely not foreign capital. Mamata’s attacks on the Tatas in Singur took them to industry-friendly Gujarat. Who lost? Today, the Tatas are laughing their way to the bank (the Gujarat government has reportedly given them land dirt cheap); and the CM of Bengal is having to beg the Asian Development Bank to give her cash (and vision) strapped government a survival loan!

Its always easier to criticize from the outside. It’s when you get inside that the reality hits you. That compromises start to get made. I know people in my company (who are not in sales) who always complained about the sales guys yielding too much to clients. A time came when a few of these people were compelled to work on some sales deals. Guess what they did? Surrendered to the clients! Being in the field is totally different from being in the cosy comforts of the office. Likewise, its easy to be a mutinous rebel and complain against everything, but it’s a whole different world when the shoe goes to the other foot and the rebel is forced to run the ship!

The real truth is that Mamata is becoming like a character on Comedy Central. She’s been losing face almost every other month, if not week. No one wants to take her in its coalition. Forget the UPA and NDA, even the third front (if there is something called that) doesn’t want to touch her. It would help Mamata if she took a few lessons from her astute capitalistic finance minister, Dr. Mitra…..


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