Lepep Budget May Miss Boat, Again

Budget Doesn't Address Dominant Issue

Namely the extensive damage caused by the flat tax: 1. a massive GDP gap; 2. a serious impairment of our domestic savings; 3. making Mauritius less competitive and dynamic by keeping local pump prices at unreal levels and 4. generating the smallest increase in real disposable income for the poorest 20% of households of the last twenty-five years. Besides the flat tax was implemented on the basis of spurious claims.

Vishnu Will Not Deliver A 'Second' Miracle

Because he is now Minister of Foreign Affairs. He was unable to deliver it in 15 months which by the way is exactly how long Pravind Jugnauth was FM in the third Bleu-Blanc-Rouge government. And just like Mr. Lutchmeenaraidoo the leader of the MSM had promised a second economic miracle. Vishnu's departure from the Ministry which made him a legend will be a personal setback for many people who voted for Lepep because they associated the first 'miracle' with him. And had wanted to witness the making of another. Live and direct.

Who's the Better Cake-Cutter?

We can get an idea if we look at the Household Budget Surveys (HBS) that our highly-esteemed CSO publishes every five years. Let us proceed the same way that a clock ticks and start comparing the 1991/92 data with that of 1996/97.

Lutchmeenaraidoo vs. Sithanen

These are quite interesting years as they coincide approximately with the last year for Vishnu Lutchmeenaraidoo as Finance Minister and the end of the first mandate of Rama Sithanen. It gives an indication of how the cutting of the economic cake changed from Minister to Minister. In this case from cousin to cousin.

As Table 1 illustrates every single group saw their share of the national cake fall except the richest one. The poorest 10% -- that's the group which is more vulnerable in case you have forgotten -- had their share reduced by 13%. The other thing you want to note here is that the ratio of the share of the wealthiest to the poorest which was 12.09 when Mr. Lutchmeenaraidoo left increased to 15.40. Which means increased inequality and that's bad for growth -- just like keeping energy prices much higher than what is reasonable, flattening taxes or creating a major structural problem by making a multi-billion rupee gift to a dead industry -- and for the general well-being of our country. Please note that these were both ministers under SAJ. And I guess you will be hard-pressed to find even traces of a savat-leponz-gato-pima effect in the 1996/97 data.

How Bad Was Sithanen?

His nine-year-old economic reforms have been an unmitigated mess. Plenty has been written about this. For example his policies have been worse than flipping a coin. A roulette in the Treasury Building would have produced even better outcomes. Which gives you an idea of the kind of skills mismatch we're talking about here. But let's look at it from a different perspective given how sophisticated Mauritian voters have shown us they can be.

Mr. Sithanen claims that he saved the economy. If that's the case then why didn't he:

1. get a ticket from Ramgoolam in 2010?

2. get a MMM ticket in 2010 after asking voters to punish one fils a papa who had betrayed him?

3. stand as an independent candidate in no. 18 in 2010? Dr. Sithanen was after all a force to reckon with in Belle-Rose/Quatre-Bornes. Not anymore.

Because if you analyse electoral data you'll find out that the people of Mauritius are able to express a whole range of feelings. For example and as the chart illustrates Sir Veerasamy Ringadoo -- our Minister of Finance for a long time -- had no problem facing the music in 1982 and even got 20% of the votes in his riding. Because SVR knew that he had done his best. Nine years later Lutchmeenaraidoo ran as a candidate for a party other than the one which had made him Finance Minister for eight years and still managed to get 46% of the votes. Fast forward nine years again and we have voters expressing an amount of sympathy towards former Police Commissioner Raj Dayal that almost got him into Parliament.