NEW GOVERNMENT'S AGENDA: FANFARE FOR THE COMMON MAN

UNCLAS SECTION 01 OF 04 NEW DELHI 001163

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PTER PREL PINR KDEM IN
SUBJECT: NEW GOVERNMENT'S AGENDA: FANFARE FOR THE COMMON MAN


1. (SBU) Summary: Indian President Pratibha Patil's address
to a joint session of Parliament on June 4 outlined the
achievements of the previous United Progressive Alliance
(UPA) government and charted a road map for the next five
years. It was largely in-line with the Congress Party's
election manifesto in reinforcing the themes of security,
dignity and prosperity. Patil laid out a range of UPA
programs - such as food guarantees and public
healthcare/educational investment - that have helped to lift
up low and moderate income voters who form the bulk of the
population. In doing so, the Congress is sticking with the
"aam admi" (common man) approach that, according to
conventional wisdom, helped to sweep the party to victory in
two consecutive national elections. The President also paid
close attention to improved governance, which has been echoed
publicly by government officials as a key priority for the
UPA.


2. (SBU) Summary (continued): In reaffirming the UPA
government's commitment to strengthening ties with the major
international powers, Patil singled out the United States and
the transformed relationship. Amid heightened tensions in
the India-Pakistan relationship, Patil indicated India would
be open to "reshaping" its relations with Islamabad if the
GoP took credible action to dismantle the terrorist
infrastructure. End Summary.

No Discretion
---


3. (SBU) President Pratibha Patil's June 4 address is the
highlight of the short parliamentary session, which runs from
June 1-9. Indian Presidents have no discretion on the
content of Presidential addresses to Parliament, which under
the Constitution are written by the incumbent government and
are used to lay out its goals and policies. Accordingly,
Patil's address outlined the broad agenda and goals of the
UPA government for its second term in office. Her remarks
were reportedly heavily worked on by Prime Minister Manmohan
Singh himself. The President's address will be followed by a
"motion of thanks," where the priorities and policies
outlined by the President are debated in the separate houses
of Parliament.

Focus on "Inclusive" Growth
---


4. (U) While the speech was a laundry list that included an
effort or initiative to target every sector and interest
group, it was clear that the focus was on the schemes
intended to benefit low income rural voters. She viewed the
election results as a "vindication of the policy architecture
of inclusion" that the UPA pursued in its last term. Over
the last five years, the UPA has implemented social and
infrastructure programs targeting rural India. As such, she
called for job reservations for women and a host of programs
for ethnic minorities and lower caste groups. Specifically,
she noted that the National Rural Employment Guarantee
(NREGA) Program would be expanded.


5. (U) Although she was not forthcoming with details, it is
likely the government will look to implement its promise in
the Congress Manifesto that would increase eligible
participation in NREGA to all members of a rural household,
not just one job per household. There has also been talk of
introducing the program to urban areas, but the low minimum
wage and nature of work would likely find less demand in the
cities. The President also promised a second Bharat Nirman,
a rural infrastructure program started in 2004 which targeted
100 percent rural elctrification, vast increase in rural
roads, more rural housing, improved water systems and
expanded rural telephony, but only partially met its targets.


6. (SBU) The speech also carried a heightened focus on food
security, noting plans to enact a new National Food Security
Act, which would enshrine in law a right for the poorest to

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affordable food, a move seen as similar to the right to work
given by the NREGA Act. In line with the election manifesto,
Patil pledged that every family below the poverty line would
be entitled to 25 kilograms or wheat or rice per month at Rs.
3 per kilogram, which could raise the USD 9.2 billion food
subsidy bill closer to USD 10 billion. Health and education
are the other key social sectors where the UPA is aiming to
significantly expand service delivery to the large numbers
currently left out of such public assistance, especially in
the rural sectors.

No Program Left Behind
---


7. (U) Patil covered all the bases with her laundry list of
priorities:

-- Security: Maintaining internal security and preserving of
communal harmony;
-- Economic Growth: Expanding economic growth in agriculture,
manufacturing and services sectors;
-- Education/Employment Infrastructure: Consolidating
government programs for education, employment, health, rural
infrastructure and urban renewal; new flagship programs for
food security and vocational skill development;
-- Welfare: Addressing urgent social welfare issues of women,
youth, children, other backward classes, scheduled castes,
scheduled tribes, minorities, handicapped persons and senior
citizens;
-- Good Governance: Adopting governance reform;
-- Energy/Environment: Ensuring energy security and
environmental protection;
-- External Affairs: Engaging with the rest of the
international community; and
-- Entrepreneurship: Promoting a culture of enterprise and
innovation.

U.S.-India Relationship a Priority
---


8. (SBU) Patil reaffirmed the Singh government's commitment
to deepening the U.S.-India bilateral relationship. "The
momentum of improvement of our relations with the major
powers will be maintained. The transformation of our
partnership with the United States of America will be taken
forward," Patil stated. She underlined the challenges ahead
in pursuing India's "non-aligned" interests while
strengthening strategic relations with global powers.
Besides consolidating existing partnerships with the U.S.,
Russia, China, Japan and the E.U., Patil indicated the GOI
would expand relations in Africa, West Asia and Latin
America.

Strengthened Regional Ties
---


9. (SBU) On Pakistan, Patil added that India would be ready
to "reshape" its relationship with Islamabad if the GoP took
credible action to dismantle the terrorist infrastructure,
which has been a stumbling block to resuming the Composite
Dialogue with Pakistan. In the only line that drew sustained
applause across the political spectrum, Patil pledged to work
closely with the Government of Sri Lanka to provide relief to
those affected by the conflict: "We will support initiatives
in Sri Lanka, which can lead to a permanent political
solution of the conflict there and ensure that Sri Lankans,
particularly Tamils, feel secure and enjoy equal rights so
they can lead a life of dignity and self-respect." The GOI,
she added, has a vital interest in working along side SAARC
member nations to promote stability, development and
prosperity in the region. "The government will sincerely
work with our neighbors to ensure that outstanding issues are
addressed and the full potential of our region is realized,"
Patil explained.

Reviving Economic Growth

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---


10. (SBU) In order for the UPA to implement development
promises, Patil said that it was critical to significantly
increase GOI revenue by implementing reform measures that
return India to the 8-9 percent annual growth rates that
preceded the global economic crisis. The President
identified a return to rapid economic growth as a high
priority for the government, signaling several areas of
market reform and liberalization that could accelerate
economic growth. Avoiding specifics, she noted a need to
increase resources in the banking and insurance sectors,
which for banks should mean increased equity shares to the
public, and for insurance, signals an intent to raise the cap
on foreign direct investment (FDI) in the sector from 26-49
percent. Patil gave a nod to the "positive effect" of FDI
and the need to encourage more flows. Once again reflecting
the Congress Manifesto, she asserted the government will
prepare a roadmap for selling minority shares in state-owned
companies, which would modestly boost government revenues by
USD 5-6 billion. The President further pledged that the move
to a national Goods and Service Tax (GST) - tentatively
planned for April 2010 - would be "vigorously pursued." The
government will also need these revenue-boosting reforms if
it pursues another fiscal stimulus package in the upcoming
budget. Patil suggested another stimulus might be coming,
focused on still-suffering exporters and small companies.

Primary Education for All
---


11. (U) Patil touted the success of the programs promoting
universal primary education and declared her government's
intention to put forward a bill in the Parliament that makes
free and compulsory education a right. The new UPA
administration is focused on making "massive investment" in
education and institutionalizing national skill development
with a goal of adding 500 million skilled workers by 2022.

Women's Reservation Bill Gets Traction
---


12. (SBU) Patil also touched upon the impending Women's
Reservation Bill. This bill will reserve one third of the
total seats in Parliament and State Assemblies for women, as
well as reserve 50 percent of all seats in local government
bodies in both rural and urban governing bodies for women.
She also outlined the UPA's government's goal to increase
representation of women in central government jobs to
alleviate the "multiple degradations of class, caste and
gender" by supporting their engagement in the public sphere.

Improved Governance, Election Takeaway
---


13. (SBU) A consistent theme throughout the President's
address is the government's aim to improve governance,
through more effective and efficient delivery of program
services to the intended beneficiaries. A number of newly
assigned ministers have struck this theme in recent days and
President Patil emphasized its importance in her speech to
Parliament. For example, she noted that bottlenecks and
delays in implementation of infrastructure projects must be
removed, in order to meet rural infrastructure project
targets. Patil also pledged "systemic reform" in the public
distribution system (PDS) as part of the government's move to
increased food security. The PDS is often criticized for
weak delivery and massive "leakages." Other governance
improvements include the introduction of a pan-India identity
card, through which the myriad existing government benefits
could be delivered more efficiently. Finally, the President
suggested the government will create a monitoring cell to
track ministries' performance, require social auditing of
NREGA, which has improved government administration in states
like Rajasthan, and issue yearly progress reports in the
social sectors.

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Comment: Striking a Balance on Reforms
---


14. (SBU) President Patil's address suggested that the
government is likely to follow a balanced approach to
reforms. The Congress-led coalition won an unexpectedly
strong victory in the national elections last month, which
has raised expectations that it will push ahead with reforms
and sales of state assets. However, the government has not
lost sight of its main elections plank of "inclusive growth."
The UPA remains focused on the aam admi - through rural
employment, free housing and food security - and will likely
move forward with selective economic reforms to balance
interests of their rural constituents. With a combined
fiscal deficit approaching eleven percent of GDP, however,
the government will be hard-pressed to increase spending
without reforms to boost revenues.

Comment: Governance, a new electoral trend?
---


15. (SBU) We will watch carefully whether President Patil's
constant reference to improved governance is mere rhetoric or
if it reflects a determined effort on the part of government
to improve its own efficiency and effectiveness. There is
some evidence that it may be the latter. Planning Commission
Deputy Chairman Montek Singh Ahluwalia has reportedly ordered
a study on how India can streamline and consolidate the
dozens of ineffective and often untapped government benefits
offered to the most vulnerable, and possibly substitute cash
transfers for health, education and income support. End
Comment.
BURLEIGH