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Sunday, 8 January 2012

Why PM is unable to push for reforms (Sunday Guardian)


MADHAV NALAPAT  NEW DELHI | 8th Jan
The current government seesms to believe that the citizens of India need constant monitoring and supervision. REUTERS
he real English-speaking elite has had a love affair with Manmohan Singh since he brought back Montek Singh Ahluwalia from oblivion in 1990. Montek's prominence in V.P. Singh's PMO (where he worked closely with Vinod Pande and Bhure Lal) had led to his temporary banishment from decision-making cabals, once the Raja of Manda was thrown out of office courtesy the deal between Chandra Shekhar and Rajiv Gandhi brokered by Subramanian Swamy.
Swamy was an old chum of Singh, who had gone off to Geneva to become Secretary-General of the South-South Commission in 1987, when it was becoming obvious that allegations of corruption were turning Prime Minister Rajiv Gandhi from a handsome prince in the public eye into a frog-like practitioner of graft.
Rajiv's many concessions to ultra-conservatives, such as opening the locks of the Babri Masjid and getting passed the Muslim Women's Bill, assisted this metamorphosis. While demographics and increased access to information was pushing a growing chunk of India towards modernity, the leader who ought to have championed such a shift remained tied to elements with a vested interest in blocking change.
Singh was a safe pick
Swamy was instrumental in persuading the then PM Chandra Shekhar, to get Singh back from Geneva, to become Economic Advisor to the Union Government, with Cabinet rank. Together, the trio (Swamy, Manmohan and Montek) began working on a package of reforms that they saw as essential to rescue India from the pit into which poor policy choices had condemned it since the 1950s. This trio could with justification be called the Brains Trust for the "Narasimha Rao Wave" of economic reforms of 1992-93.
Rao, who was conscious 24/7 of being the first PM from the South and not being from the Nehru family, wanted a technocrat as his Finance Minister. Every ministry has to pass through Finance, thereby making its holder the most important personage in the government after the Prime Minister himself. He saw Singh as being unable to think politically (and thereby to acquire an independent power base), and therefore a safe pick, one favoured by policy and academic groups in the UK and the US, two countries Rao wanted on his side.
Had Singh been a determined for reform, as he later was in the case of the Indo-US nuclear deal, India may have witnessed a raft of measures that would by now have made Indian industry world leaders, and sent the economy into the same double-digit growth that China achieved since 1979. 
While Swamy remained outside government (till brought back in 1994 by Narasimha Rao as the Cabinet-rank head of a one-man commission), Montek was back, this time as the Union Finance Secretary. The two dusted off the report and papers on economic reform which they had worked together on in 1990, and which had in fact been approved by the Chandra Shekhar cabinet on 11 March 1991.
Singh persuaded Rao that the country faced a situation where, either the reforms got carried out or the economy would collapse. Ever since then, Rao remained a firm backer of the Manmohan-Swamy-Montek plan during his first three years as PM, losing appetite for more comprehensive reforms only after being challenged politically by Arjun Singh in 1995.
Since then, the country has been waiting for a Second Wave of economic reforms that would free the labour market from rigidities that choke employment, and empower domestic enterprises to face competition on equal terms with global multinationals.
NO CHALLENGE TO SONIA
After the Congress defeat in the 1996 Lok Sabha polls, the party turned against economic reform, with the A.K. Antony Committee stating that the economic policies followed by Rao were the primary factor behind the defeat. It was a lean period for Singh, who however came back into his own once Sonia Gandhi was brought into the Congress Party as its president by Sharad Pawar, K. Karunakaran and Arjun Sihgh.
The trio ousted Sitaram Kesri and brought Sonia Gandhi, seeing in her a politician who could tap into both the "sympathy vote" as Rajiv's widow and appeal to the growing number of "modernisers" (as distinct from "traditionalists") in India.
They made the same mistake about Sonia, which S.K. Patil, Kamaraj and S. Nijalingappa had made about Indira Gandhi in 1966 — that she would docilely follow their lead. However, Sonia went beyond the heads of the able but ambitious Arjun-Karunakaran-Pawar trio and began looked towards Singh, who had been persuaded to contest the 1999 polls by Arjun Singh, who had (through the acolytes that surrounded Singh) arranged for his defeat. That ought to have spelled the end for the soft-spoken economist, except that Sonia made him both a Rajya Sabha MP as well as Leader of the Opposition in that house, to the dismay of traditional politicians in the Congress Party.
With Japan’s Prime Minister Yoshihiko NodA. REUTERS
When the Congress Party came to power in 2004, Sonia chose an individual least likely to pose a political challenge to her, Singh. The same consideration had been core in her 1991 backing of Rao over Sharad Pawar for the same job. At that time, her Man Friday, Vincent George, had burned the phone lines making calls to Congress MPs asking for them to back Rao, a prospect that enthused few. But for such support from Sonia, it would have been Pawar and not Rao who took office as PM on June 21, 1991.
MORE POWER TO STATE THAN CITIZEN
When Singh became as PM on 22 May 2004, it was expected that the Second Wave of Reforms would not be long in coming.
Had Singh been a determined for reformS as he later was in the case of the Indo-US nuclear deal, the country may have witnessed a raft of measures that would by now have made Indian industry world leaders, and sent the economy into the same double-digit growth that China achieved for nearly three decades since the Deng Xiaoping reforms of 1979.
However, the difference between 1991 and 2004 was that in the former case, Singh had a boss who was convinced of the imperative need for reforms, and who therefore backed him in the implementation of deregulation, duty cuts and other measures.
Sonia Gandhi's model was similar to the one followed by Indira Gandhi, who was reflexively opposed to any dilution in the power of the government. For both (like Nehru), the people of India are not mature enough to pass the time unescorted by an all-seeing state. They need constant monitoring and supervision. Since 2004, despite The Reformer heading the government, there has been a steady increase in the powers of the state vis-a-vis the rights of the citizen.
CONTEMPT FOR THE MIDDLE CLASS
Even during 1991-1996, Singh had been unwilling to go beyond the World Bank/WTO rulebook on economic policy. He had, for example, argued — unfortunately with success — against moves to slash income taxes during his term as Finance Minister.
The army of foreign-trained and foreign "experts" and "advisers" argued against any measure that would bring relief to the Indian middle class. They have contempt for this class, while professing extreme sympathy for the poor.
Since 2004, the "craze for foreign" that has permeated governance in India since the period when Nehru was in office, has returned in force during the UPA's stint in power. And once again, it is the Indian middle class and business that has become the primary target of policies designed to deprive both of the freedoms and opportunities their counterparts in the EU and in North America enjoy.
Both Sonia and Singh seem to be fully backing the Chidambarams, the Sibals and other UPA luminaries in their battle to box in the population through sharp increases in regulations that seem designed simply to create roadblocks that will need bribes to clear.
Clearly, Singh still believes in the British colonial mode of governance continued (with a few modifications) by Nehru and his successors, who saw the system as an ideal way to ensure that the state always had supremacy over the people.
Singh's choice of people to man the numerous commissions that he has set up show his fealty to the view that only those steeped in the culture of the government can be trusted to handle policy, with Nandan Nilekani being the only notable exception. Hence, it is wrong to presume (as many do) that the cause of the UPA's continuing aversion to reforms is Sonia Gandhi.
No supporters
Except for 1992-94, Singh has shown no penchant for reforms, either before or after that time bracket. Of course, he is handicapped in a way that few PMs have been in the past, having a Supreme Leader to whom he must report. That each member of his Cabinet reports to Sonia Gandhi rather than to him is as obvious as the substantial input of 10 Janpath in both the framing of policies as well as in selection of personnel, including within the PMO.
Singh's stint in office as PM has disillusioned the public. Even the policymakers and academics of the US and the EU — who have for decades been his cheerleaders — are now openly regarding Singh with pity, or even contempt. He may survive upto 2014, or go in 2012, the way several within his own party are demanding.
But his lack of will or ability to implement the Second Wave of Reforms seems to be leading him towards a spot in the history books that would make his friends and admirers cringe.

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