Well Begun, But Only Half Done

The Prime Minister has at last acted decisively to put the reform agenda back on track.

By B G Verghese

New Indian Express, 16 September, 2012

The Prime Minister has at last acted decisively to put the reform agenda back on track. As long as he hesitated on mistaken considerations of coalition dharma, he was targeted by all and sundry. Having boldly announced a slew of measures long on hold, he is being attacked by heads-I-win-tails-you-lose critics for being impetuous, selling out to foreign interests, and failing to consult. The Opposition and internal UPA saboteurs’ bluff has been called.

They will now huff and puff and indulge in protests and bandhs but they have lost the plot. Not consulted they say? But they would not let Parliament function. Mamata and Karunanidhi’s ministerial henchmen, Mukul Roy and Alagazhi, did not attend cabinet meetings where these matters were discussed. The Trinamool has given the Government an ultimatum before it takes “hard decisions”. Mulayam is also strutting around saying all things to all men. However, the limits of blackmail have been reached. Let these unprincipled leaders go their own way, if they dare, and explain to their own rank and file and the nation why they wish to prevent investment, employment, growth and strategies to curb inflation by bringing the fiscal deficit under control.

Even if the Trinamool and DMK fall in line, Mukul Roy and Alagizi, net liabilities in any calculus of good government, must be dropped and the PM must choose his own cabinet colleagues and allot them such portfolios as he thinks they might suitably manage. He has to crack the whip and ensure collective cabinet responsibility, due attendance and coalition discipline. This applies equally to dissidence in the Congress. It is the Government and not the Party that must lead and there must be no doubt where power lies.

The fact is that no other party, with their prime ministerial hopefuls in tow, is truly ready to face elections, rhetoric and bombast apart. The BJP, BJD and Left are divided and a Third Fronts remains a pie in the sky. Within the Congress, there is no credible alternative to Dr Manmohan Singh, as Rahul Baba, despite every opportunity and urging, has simply failed to show his mettle. Since he is not hankering for another term, the PM’s position is unassailable, all the real and imagined scams at his government’s door notwithstanding. At the end of the day, you may accuse him of drift and indecision, but none can challenge his personal integrity. In these circumstances, he can stake the future of his government and good governance by pressing forward with economic and systemic reform regardless. At worst he will go down fighting but that very outcome could revive the Congress and refurbish its image and give it a programme and cause.

Take the case of diesel prices. These have been subsidised for years, as have LPG cylinders and kerosene. The Government has “de-regulated” oil prices so that they might float with international crude prices. But the backlog of subsidy that was cast on the oil companies was not compensated. With the recent Rs 5 per litre diesel price hike and cap of six on the number of subsidised LPG cylinders a family might buy in a year, the oil companies will make good some past under-recoveries but yet leave an uncovered deficit of Rs 1,67,000 crores. This has added to the fiscal deficit and consequent inflation and a presumptive loss of almost as much as estimated by the CAG for Colgate by his own logic. Add the large food and fertiliser subsides and the arithmetic gets far worse.

Of course, social benefits, such as reaching rations to the poor and undernourished mothers and children, confers large social benefits on millions, just as low call prices benefited and hugely empowered the sharply rising curve of mobile users in the 2G case. But do diesel subsidies go to the poor? Much of it is consumed by diesel cars and otherwise diverted from the “rural poor” in whose name it is justified in the first instance. Using the “rural poor” as a smokescreen is a gimmick that robs the poor at the cost of the well- heeled.

The arguments trotted out against FDI in multi-brand retail are also wildly exaggerated. The Government has sensibly conceded that States are free to adopt the system and nine States and UTs propose to do so. The dissidents cannot now claim a veto over others. Again, FDI in retail will be limited to only one-million-plus cities with 30 per of the investment dedicated to developing back-end infrastructure and linkages that will greatly help develop farm infrastructure, cold chains, and so forth, much of these indented on small and medium enterprises. These backward and forward linkages will stimulate local entrepreneurship and manufactures, generate employment and get idle hands off the land. Middlemen will be eliminated; the producer and consumer will get better prices; and farmers superior extension services and a quality brand image. These are all elements of a new farm revolution.

Cussed politicians may “ban” FDI-retail in their states; but their farmers and consumers will clamour for similar opportunities as soon as the gains become evident. Recall the uninformed “potato chip vs integrated chip” debate when PEPSI proposed a tomato and potato partnership with farmers in Punjab. Flavoured and blended potato chips packets are today sold in every nook and corner of the country, largely by mum and pop shops which have not been driven out of business.

The reform programme should move on to pensions, banking, insurance, modernising antiquated labour laws and archaic governance systems. Disinvestment could be one route to de-nationalisation and ending inefficient public sector monopolies that represent another form of cronyism with the bureaucracy, politicians and labour barons cossetted together. All these measures would require independent regulators and transparency. The Finance Minister’s announcement that Government intends to set up a high level ministerial group to accord, final across-the-board approvals to mega projects is greatly to be welcomed as the sad story of 5-7-10 year delays in securing approval from multiple sources, sometimes with rules applied retrospectively, has brought investment to a standstill in key infrastructure areas. “Virulent nostalgia” is chaining peasants to the land and tribals to the forests with no escape from penury and dead tradition though they too wish to modernise.

The mindless Koodankulam and Indira Sagar “jal samarpan” demonstrations staged by puppeteers before cameras are a case in point. And what is the police supposed to do? Permit “peaceful anarchy”? The charge of sedition is obviously inappropriate for offending decency, national symbols and faith as Aseem Trivedi and a nut Florida pastor have done through cartoons and video clips, but such conduct is reprehensible and irresponsible and stretches the concept of freedom of expression to absurdity. Likewise, the Supreme Court has properly juxtaposed the right to a fair trial against freedom of expression. Censorship is not the answer. Restraint is.

back to the top

HOME | ABOUT THE AUTHOR | LIST OF ARTICLES | CONTACT | BOOKS