Lalu is from mars, Pc is from uranus

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While Lalu ‘Karan’ Yadav has emerged as the reformer, who’s keen to introduce world-class processes in Indian Railways, Palaniappan ‘Arjun’ Chidambaram has introduced proposals that smell of tacky populism, if not downright vote-bank budgeting. It’s a clear case of Politics vs Privatisation

T hough the concept of reincarnation had been written about and captured on reel too many times before, it was the 1995 movie, Karan Arjun, which took the concept of reincarnation to a new sibling level. We had, lo and behold, two brothers, living in a rural village, who’re killed in one birth (of course, how’ll they be reincarnated otherwise), and are reborn again in a few years in a city – with each bro’ having a starkly different personality – to come back together to avenge their earlier ‘early’ demise!

Well, consider the stunning similarities this movie has with our hero duo, Lalu Yadav and P. Chidamabram (PC for us; works in movies too), and their recently presented Budgets. While both Lalu and PC suffered huge near-death political setbacks in their political lives, a few years down the line, they seem to have been reincarnated with a rejuvenated verve towards gaining political power in India. It’s quite surprising but Lalu and PC, just like Karan and Arjun, though (perhaps) having a similar objective, actually have different attitudes towards life – theirs, as well as those of the 800-odd million thoroughly disadvantaged poverty-ridden Indians living below $2 per day (UNDP data). Think about it! While Chidambaram, to woo vote banks, has shrewdly kept the hooting horn blowing 24x7 to ensure his Budget is perceived as populism incarnate itself, the fashionista’s nightmare Lalu Prasad Yadav has doubly ensured that his reforms are pristinely focused towards earning money and less about playing to the masses! In other words, while Lalu is focusing on earning money for the future elections, PC is focusing on losing money, of course, for the future elections! B&E compiled a few choice examples.

Though Lalu ‘Karan’ Yadav has given a few sops to passengers (like reducing fares, more as a matter of lip service), it’s quite clear that he knows that Railways earns almost 90% of revenues from freight only, reason enough for Lalu to ensure maximum focus on this segment only. His focus on building a new coach factory in Kerala is extremely tactical, as the coaches from this factory would be lighter and would allow more wagons per train, increasing payloads by almost 78%! That’s a humungous increase simply by process reengineering – that is, by increasing yield per train than load tariff being charged. In fact, Lalu has most cleverly reduced freight rates. In another brilliant tactical move, Lalu has started focusing more on commodities that have a higher potential for revenue generation, for example, steel, export goods, cement, etc. Look at where has it brought the Railways. Under the NDA government, while costs were almost 96% of revenue, under Lalu, costs are only 75% of revenues, displaying record operating margins. Accidents have dramatically decreased and, at the same time, Railways profits have increased this year to Rs.25,000 crore, which is a benchmark 21% return on capital. Lalu has cleverly achieved 15% rise in earnings simply by increasing freight volumes by 8.6%. And this year, the volume is again expected to increase by 7.6%, which can consequently add a staggering 10.4% more to the revenues.

Now look at what Palaniappan ‘Arjun’ Chidambaram has conjured up. Firstly, the purely populist and definitely pompous Rs.60,000 crore loan waiver for small and marginal farmers seemingly is targeted towards the misery-ridden downtrodden farmers. Unfortunately, with more than 50% of farmer families already entwined in debt traps, and nearly half of those with private non-institutionalised sources, this waiver in reality would fail to reach the true disadvantaged farmers, but would still ensure superhot hype and wasteful government investments!

But PC populist Arjun doesn’t stop here. Income tax threshold has been raised to Rs.150,000, banking transaction tax is being withdrawn, hospitals are being given five-year tax holidays, corporate taxes remain unchanged, so does peak customs duty, central value-added tax is being reduced to 14%, pharma excise duty down to 8%, excise duty on two and three wheelers cut to 12%, small car duty cut altogether, petrol and diesel ad valorem duty cut completely and replaced with standard duty that’s almost half of previous, fertiliser subsidy (Rs.310 billion), special purpose tea fund (Rs.400 million), farm credit target (Rs.2.8 trillion), food subsidy (Rs.327 billion). Almost everything smells of tacky populism, if not downright vote-bank budgeting!

And where has he openly tried to increase the government’s revenues? You’ll die laughing if you hear it. PC’s planned to levy a 5% customs duty on naphtha imports by polymer units! You tell us, if this is not playing to the masses, then what is. It’s quite clear that though Lalu’s reforms might not be perceived by the masses as impressively as PC’s, the fact of the matter is that Lalu is closer to ground realities of business, as PC is perhaps to the ballot!

It was John Gray who glamorously used planetary symbols to define the differences between men and women in his book, Men Are From Mars, Women Are From Venus. As the Budget story goes now, the Martian Lalu surely seems closer to Earth with respect to practical revenue generation than ‘Uranusian’ Chidambaram, whose misplaced budgetary ambitions might yet work out, not purely for the actual advantage his proposals give to the disadvantaged masses, but more so for the potential ‘populist’ marketing hype that can be generated throughout India within hundreds of millions of unlettered civilians.

Well, it’s not just by chance that 61 years into Independence, our intellectual politicians have safely kept more than 400 million Indians as thoroughly illiterate, and also utterly poor and distressed. Now, what do you say?

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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