Goa, known for sun, sand and fun, isn't the best place to take a refresher course in BJPnomics. But that's exactly what Finance Minister Yashwant Sinha was subjected to during his party's National Executive meeting on April 13 and 14. At the Hotel Marriott, overlooking the Miramar Beach in Panjim, Sinha was at the receiving end of many BJP stalwarts' frustration at losing the recent assembly and municipal elections.

The party's Rajasthan satrap Bhairon Singh Shekhawat charged Sinha with spending more time with big businessmen in five-star hotels than with BJP workers at party meetings. Others attributed Sinha's budget proposals of cuts in income-tax rebates and hike in tax rates to the minister's excessive reliance on bureaucrats' advice. BJP President Jana Krishnamurthy declared, "There is an impression that some of the budget proposals have contributed to the party's setback. Even the prime minister has mentioned it."

Though nobody doubted the merit and intention of Sinha's policies-and the prime minister defended him-the consensus was that the finance minister had been politically naive in shaping and communicating some policies. That's quite a strong remark about a man who has presented five consecutive budgets since 1998-99.

Economy

THE EXECUTIVE ORDER What the Goa resolution demands of the Government and what it means DEMAND: Restore 20% income-tax rebate under Sec 88. Reconsider service tax on insurance. IMPLICATION: Get back the support of the urban middle class, the BJP's core constituency. DEMAND: Start monthly-income plan for senior citizens; expedite the proposed pension scheme for the poor. IMPLICATION: The idea is to protect the old and poor from falling interest rates. DEMAND: Don't announce hike in prices. Instead, point out the reduction in subsidy. IMPLICATION: A politically correct way of conveying price increases. Has sound economic logic too. DEMAND: Give fertiliser subsidy directly to farmers instead of routing it through companies. IMPLICATION: Noble intention but no one knows how to do it; political interests in fertiliser companies run deep. DEMAND: Reduce foodgrain prices sold through ration shops by managing food stocks better. IMPLICATION: Means downsizing and improving FCI. Sinha has been trying to do so-unsuccessfully. DEMAND: Earn support of people for harsh reforms by enforcing austerity on ministers, bureaucrats. IMPLICATION: Leaders tightening belts before asking people is a lofty idea. Nobody believes it will happen.

In January 1999, when the Atal Bihari Vajpayee Government's economic policies were under fire from the BJP, the Government had the last word. In his speech at the BJP's National Executive meeting at Bangalore on January 2, 1999, Vajpayee settled the Party vs Government debate by claiming, "While consultations between the party and the Government are necessary, the Government's decisions are final." He had blamed the party for not being able to communicate the Government's achievements to the people. At the time, the BJP had lost assembly elections in Rajasthan, Madhya Pradesh and Delhi, and polls in Karnataka and Andhra Pradesh were round the corner.

In Goa last fortnight, however, the party was on the offensive and the Government went on the back foot. Not because the Government's economic policies have drastically changed since 1999, but because those policies didn't seem to have yielded political dividends. Says Jagdish Shettigar, head of BJP's economic cell: "The issue isn't what the Government is doing, but how it is doing what it is doing. All economic decisions are right and desirable, but they could be packaged and communicated better."

That's why the party's bark turned out to be worse than its bite. The 17-point economic resolution released on April 13 in Goa didn't object to the thrust and direction of reforms and only asked for two changes in the budget: restoration of income-tax benefits and withdrawal of service tax on insurance. It's now certain that on both counts, the Finance Ministry will bow to the party's wishes (see chart).

The other points in the resolution endorse the Government's economic policies and actually offer advice on how to reform faster and better. That's good news. Claims Shettigar: "There is no doubt that harsh steps have to be taken." Such as frequent changes in the prices of petroleum products and periodic increases in prices of LPG and kerosene, which will now take place since government control on petroleum prices has been lifted. The party is not opposed to increase in prices; it only wants ministers to stop announcing the hikes.

Economy

"We need to market the reforms. After all, reforms eventually benefit the people." Arun Jaitley, minister for law, justice & company affairs "Regular meetings of ministers and cadres at the party's offices will be beneficial." B.C. Khanduri, minister for road transport and highways

The logic is clear: since the Government isn't setting the prices any longer, why should it associate itself with the changes in prices and draw the politically fatal flak for that? For kerosene and LPG prices-the Government is committed to subsidising the two products for another 3-5 years-the suggestion is more subtle. Every time the subsidy is reduced, and hence the price is raised, don't announce the price. Instead, declare the subsidy. The benefit: people will come to know how much subsidy the Government is still bearing and be convinced of the reasons for the price hike. "We need to market the reforms well. After all, every reform measure eventually benefits the people," argues Arun Jaitley, minister for law, justice and company affairs.

Though the party resolution admits that the reduction in interest rates on small savings has upset small investors, it isn't in favour of restoring the reduction. It recognises that low interest rates are necessary for industry's survival and competitiveness. The party has, therefore, asked for a special monthly income scheme for retired people to ensure that they aren't affected by frequent changes in interest rates. The resolution also demands providing fertiliser subsidy directly to farmers instead of routing it through fertiliser companies. It has asked for strict austerity on the part of ministers and bureaucrats. Three of the 17 charters of demands were suggested by Sinha himself. These relate to strengthening of SEBI, faster privatisation and quick clearance of economic legislations pending in Parliament.

The apparent reform-friendliness of the party stems from the fact that economic realities are too stark to allow unbridled populism. If the entire resolution is implemented-though that is unlikely-the Government will more than recover the money it stands to lose by restoring the income-tax rebates and withdrawing the service tax on insurance (estimated loss Rs 6,000-8,000 crore). Then, of course, there is the lurking feeling among BJP leaders that the real reason for the party's electoral reversals wasn't Sinha's tough economic policies but poor governance in the states. But party leaders admit this only in private.

A grudge most party cadres hold is the absence of regular interaction between the party and the Government. They insist that their awareness of the need for reforms will improve if they meet ministers frequently. Some ministers agree. "It would be mutually beneficial if ministers regularly interact with workers at the party's central and state headquarters. The party will understand what the Government is doing; and ministers will know how policies are being perceived by the people," suggests B.C. Khanduri, minister for road transport and highways. Jairam Ramesh, Congress general secretary who was OSD in the Finance Ministry in the United Front government, suggests a system of regular interaction on economic issues with coalition partners. Such rules which help manage coalitions are well institutionalised in Kerala, he points out.

The coordination issues apart, the BJP's apparent openness to tough reforms is heartening. And if that is for real, it indicates that BJPnomics really means business.