Dribble that reforms ball   Leave a comment

Manmohan Singh’s refusal to engage with coalition politics is to blame for economic woes

Recent commentary on Prime Minister Manmohan Singh’s ability to revive the India story has swung between great expectations now that he has taken charge of the finance ministry and a caustic appraisal of the man as an ”underachiever”. The cheerleaders maintain that Manmohan Singh’s prowess as an economist is the panacea to the current problems and growth will be back on track by October. The critics say it is the PM’s ”private and political gloom” that is holding him back.

It is unfortunate that tan-gential issues are shaping the debate. Chatter about Keynesian theories and animal spirits” has obscured the fact that today’s crisis is largely a consequence of poor politics rather than bad economics. If the reforms process has stalled and the growth rate is slumping, it is because the present dispensation has shown a curious reluctance to manage the political environment and create opportunities to take key decisions. On the contrary, there is a disturbing tendency to see politics as an impediment and blame coalition compulsions for inaction.

If this were indeed the case, P V Narasimha Rao may never have started the reforms process in 1991 and successive governments of different political hues and configurations would not have continued it over the next two decades. Manmohan Singh would have been remembered then as just another successful bureaucrat, instead of the man who helped to transform the country’s economy.

In fact, the liberalisation story unfolded during a period of immense political turmoil marked by the brutal assassination of Rajiv Gandhi, the decline of the Congress, the rise of the BJP on the communally emotive mandir issue and nascent experi-ments with coalition governments. Not enough credit has been given to Rao for his contribution to the reforms process.

As finance minister, Singh was the nuts and bolts man but he would have fallen at first hurdle without Rao’s political dexterity to help him. Although Rao did not have the necessary numbers in Parliament, he managed to win support for Singh’s reformist budgets through shrewd management of the political mood, which saw both the Left and the Right propping up his minority government in the shocked aftermath of Rajiv Gandhi’s assassination.

Rao’s success was largely due to his willingness to engage with politics and his ability to remain in control of the ball through adroit backroom manoeuvres. He too had his demons to vanquish, the most notable being Gandhi family loyalist Arjun Singh who was waiting to trip him up at every step. Rao would often let his political buddies, some of them outside his own party like his immediate predecessor as prime minister, Chandra Shekhar, and Atal Bihari Vajpayee of the BJP, speak on his behalf and bail him out on contentious issues.

Vajpayee too used political ingenuity to carry the reforms process forward when he became PM in 1998. Sandwiched between a volatile coalition of 20 parties in the NDA and the RSS-backed Swadeshi Jagran Manch which was anti-foreign, anti-globalisation and anti-WTO, a lesser politician may have thrown up his hands – especially when proponents of swadeshi economics swarmed out of the woodwork in Nagpur (the headquarters of the RSS) to lead street demonstrations against Vajpayee’s policies.

But he cunningly fielded allies like Chandrababu Naidu of the TDP to play on the Sangh’s fears of losing its first ever government in New Delhi and managed to push through measures like aligning customs and excise duties with WTO norms and dismantling the administered prices mechanism for the oil sector, at least for some time. The trade-off for Naidu was the plum post of Lok Sabha Speaker for a TDP man and generous financial handouts from the Centre for Andhra Pradesh.

Politics is the bedrock of a democracy. In India, with its complexity and diversity, it tends to be confusing, chaotic and messy. But every government has to engage with it and tame the beast for effective policymaking. Economic reforms will succeed only if they are seen as measures that will benefit people. Rao managed to dribble the reforms ball through the political system but he left the job half-done because he was unable to package them for a larger audience.

The challenge before Manmohan Singh is twofold. He has to first revive the political consensus on reforms that his predecessors had crafted with consummate skill. This means working closely with Sonia Gandhi to get the Congress on board and then tackling difficult allies like the Trinamool Congress. More importantly, he and Sonia must dovetail reforms into the party’s political imperatives. Six crucial state assembly elections loom over the next one-and-a-half years, leading into the Lok Sabha polls in 2014. Unless Congressmen and women see political and electoral benefits from the reforms process, Singh will not be able to carry his party with him.

With most political parties reluctant to face an early general election and no imminent threat to his position as prime minister, Singh has a window of oppor-tunity. It will be a pity if he hesitates to use the lessons he learnt from a master like Rao to manage the politics of getting the economy back on track.


Posted July 17, 2012 by avinash2060 in Uncategorized

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