R Jagannathan

Politics has up-ended the UPA's dream team of Manmohan Singh and P Chidambaram. Both of them had earned their spurs as reform-oriented ministers in the Narasimha Rao government, but today both of them are pale shadows of their former selves.

The political hats they wear do not fit as reforms have been a strict no-no in a Left- supported government. With inflation gutting their carefully laid plans for going back to the electorate with something to show, they are back to square one.

Bad economics is making for bad politics. To be sure, when you take the entire sweep of the UPA's economic policies, there's some good news to tell.

The big thing the UPA got right was to start moving resources towards the poor and the underprivileged. Growth cannot be monopolised by the rich alone.

Big spending programmes were announced for employment - many of them boondoggles - in rural areas, and some of that money is probably going to the poor.

Luckily for the UPA, they got a head start as the economy had already started rebounding in the last two years of the NDA regime. As the momentum picked up, all Singh and Chidambaram had to do was harness the rise in revenues and channel it towards social schemes. They did that all right, but without revamping the delivery systems.

The poor did not get as much as they thought they should, and are certainly not going to thank the UPA for it.

Fiscal profligacy has its own way of biting the hand that feeds it. The spending increased and cash put in the hands of the poor has, in turn, fuelled the fire of inflation, aided by a global crude price boom and food shortages. Net result: most of the cash doled out to the poor has been eaten away by price increases.

Chidambaram once said that good economics makes for good politics. He's right. The Left has forced him to pursue bad economics - no reforms, no fuel price increases - and the chances the UPA will pay a political price at the next general elections.

The UPA has been overly concerned about the aam aadmi and "inclusive growth". But in an open economy, you cannot forget your macroeconomics, however much the milk of human kindness is sloshing inside you.

Source : DNAIndia