Sonia weakens, but is PM stronger?

By Swapan Dasgupta

Chief Economic Adviser Kaushik Basu is not your average technocratic hack whose political bias needs to be seriously discounted. Therefore, when he pronounced last Friday that India’s economic growth will be back on track by October, there was reason to feel hopeful. Unfortunately, thanks to the Government’s impressive record of bullish talk that is not complemented by realities on the ground—remember the talk of prices coming down within 100 days of UPA-II assuming power—Basu should not feel slighted if his optimism is not widely shared.

It is not that stakeholders are unreceptive to good news. It took the Finance Ministry, now under the direct charge of the Prime Minister, to promise a review of the more ridiculous facets of Pranab Mukherjee’s Budget for the Sensex to gain 439 points on a single day and for the Indian Rupee to appreciate in value. That it took so little effort to boost sentiment merely shows the extent to which the despondency over economic mismanagement was also accompanied by a feeling that many of the problems confronting India are self-inflicted. India is anxious for good news but the Government has given them so little to be cheerful about.

So deep is the dejection that the PMO’s tweet about the Government helping India to recover the “animal spirit” in the economy was accompanied by an innocent question: Is the mouse an animal?

It’s a question that will be uppermost in the minds of both Indians and all those with a stake in India. For too long, Manmohan Singh has given the impression that he has abdicated his larger responsibilities. He has watched passively as important Cabinet ministers took decisions and acted in a way that was inimical to the interests of the country. He probably knew that what they were doing was wrong and often unethical—the 2-G issue is a prime example. Yet, he did nothing to guide them into doing the right thing—thereby fostering the impression that he was too weak to intervene.

Are things different now that he is also wearing the hat of the Finance Minister? Is the troika of Manmohan-Montek Singh Ahluwalia-C.Rangarajan the equivalent of Douglas Jardine’s team that decimated an Australian side which included the legendary Don Bradman? With Bodyline bowling, Jardine displayed an “animal spirit” not hitherto associated with either the MCC or indeed cricket. Will Manmohan ruthlessly sweep away the bureaucratic inertia and the sanctions raj and make India an entrepreneur-friendly country? Will he complement the natural Indian desire to create wealth with purposeful governance?

The problem is that when the issue of ‘reforms’ is scrutinised for concrete details, last Friday’s stock market rally begins to look like a bout of irrational exuberance. There was a time when good politics and good economics meant government doing as little as possible and allowing market forces to do the needful. Unfortunately, that time is long gone.

The souring of the India story owes a great deal to malevolent governance. The fiscal deficit cannot be brought under control unless government expenditure keeps a healthy balance with revenues; the bottlenecks in production cannot be removed unless the government attends to the power deficit, speeds up work on the Mumbai-Delhi corridor, improves surface transport and improves the productivity of ports; and entrepreneurship cannot flower unless the number of official sanctions is sharply reduced, corruption is brought under control and environmental clearances stop being used as a political plaything.

There is, of course, another grave issue that the PM must address. For the past seven years, there has been a divergence of approach involving the political head of the government and the nominal head of the Cabinet. This has led to policy incoherence and drift. Sonia Gandhi wants to be India’s Lady Bountiful, doling out largesse to the poor and needy; Manmohan Singh wants to revive the “animal spirit” in the people. The two approaches just don’t converge—not even through the over-use of a meaningless phrase called ‘inclusive’ growth.

The issue that, therefore, has to be explored is simple: has the balance of power tilted abruptly against Sonia Gandhi after a series of embarrassments over the presidential election? Yes, there is no question that all the sophistry of Digvijay Singh hasn’t been able to dispel the belief that the Congress President is weaker than she was six months ago. More than being forced to select Pranab Babu over her preferred choice Hamid Ansari, it is the defeat in Uttar Pradesh and the decimation in Andhra Pradesh that have undermined the dynastic forces. Add to this the sorry spectacle of the heir apparent reduced to making sporadic appearances and performing item numbers that have no bearing on the main plot, and the demoralisation of the Congress will be apparent.

However, the weakening of Sonia hasn’t led to a corresponding enhancement of the PM’s political clout. That the PM still has to bank on Montek and Rangarajan to fulfil his economic agenda shows how clearly isolated he is in the political arena. Jairam Ramesh’s decision to both submit and publicise his job application as Finance Minister to 10 Janpath suggests that Manmohan’s continuation as Finance Minister is not a given. In any case, the PM will be loath to face up to insolent parliamentary interrogation in the Monsoon session.

To attend to India’s faltering economy, the country has to first address the political listlessness.


Sunday Pioneer, July 1, 2012