The Poor Who Vote

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Measured by the only test that matters—its effect on helping the poor—what impact will Chidambaram's budget have? Some of his proposals have been widely welcomed. By asking banks to increase rural credit by 30% this year, Chidambaram gives hope to India's cash-starved farmers. But other plans are more controversial. The Finance Minister argued that subsidies "provide a measure of protection for the poor." Economic reformers didn't like that. "Our concern for fighting poverty should not mean that we continue with inefficient subsidies," says Jayaprakash Narayan, founder of Lok Satta, an NGO that focuses on good governance. Narayan argues that subsidies for food and fertilizer mostly end up with corrupt bureaucrats and inefficient manufacturers, and does little for the poor themselves. Higher spending means the government will likely miss its deficit-reduction targets for next year. Yet Chidambaram insists that he remains on track to contain India's deficit. "I have made a solemn commitment that we will resume on the path of fiscal correction in 2006-7," he told TIME.

Even before it lifts a single Indian out of poverty, Chidambaram's budget has already achieved something important: it had none of the socialist rhetoric of the past. Chidambaram has increased spending on the poor without punishing the middle class and rich, and has hence shown that fighting poverty and keeping India's economy booming need not be contradictory goals. Indeed, the Bombay stock market shot up 2.2% on the day of his speech.

Yet even if most Indians accept that their country's new prosperity must be shared, many remain pessimistic that the poor will benefit from the measures. "We have no reason to believe that the current bureaucratic system can deliver," says P. Chengala Reddy, of the Indian Farmers and Industry Alliance, a farmers' lobby, citing the wastage and corruption that have blighted previous initiatives. Chidambaram's paradox is this: to reach India's poor, he has to rely on a bureaucracy whose inefficiency helped perpetuate the problem of poverty in the first place. The Finance Minister is aware of the challenge. "We have provided the money, and I accept that it is our responsibility also to ensure that the delivery systems are improved," he told TIME, and his speech acknowledged the reality of India's sclerotic bureaucracy. "The fact that someone in government has voiced this concern is a positive step," says Sashi Krishnan, chief executive of Bombay-based Cholamandalam Asset Management Co., which manages mutual funds. Chidambaram has shown that the government has the will and the wallet to help the poor. If he can now ensure that they truly get the help they deserve, his budget will be remembered even more than the one from eight years ago that the middle class still celebrates.