Union law minister Salman Khurshid’s apparent exasperation with Congress general secretary Rahul Gandhi for the latter’s failure to undertake his responsibilities as the de facto Number Two became a talking point in political circles this week.
Predictably, the focus was on the Congress’ heir apparent for his rather casual approach to the crisis that has overwhelmed the Congress and the UPA-2 government. However, what was less noticed was Mr Khurshid’s parallel indictment of a government in which he is a Cabinet minister. In UPA-2, he said, “governance and politics have all got intermingled. The political props have all got mixed up. It’s a scattered situation.” Mr Khurshid did not elaborate on the details of this dispersal. But he said enough: “It’s not only economic reforms that have slowed down. Even political and administrative reforms have not happened because of this situation.” Translated into plain English, the minister was saying that UPA-2 was dysfunctional.
Coming as it did within a day of the government over-reacting to a Time magazine article dubbing Prime Minister Manmohan Singh an “underachiever”, Mr Khurshid’s comments added to the Congress’ despondency with the prevailing state of politics. Together, they also punctured the attempt by the Prime Minister’s Office to suggest that the departure of Pranab Mukherjee from North Block has made the government more purposeful and set the stage for a bout of course-correcting reforms.
The attempt to talk up the economy and restore a measure of confidence in a faltering economy was well-intentioned. Unfortunately, they always lacked a substantial political basis. Observers could not but gauge the fact that all the activity seemed to be centred on the utterances of three individuals: Montek Singh Ahluwalia, C. Ranga-rajan and Kaushik Basu. There was a beeline of prominent industrialists who met Dr Ahluwalia at Yojana Bhavan; Mr Rangarajan, in his capacity as the head of the Prime Minister’s Economic Advisory Council, met a delegation from the Confederation of Indian Industry (CII) who presented him with demands for interest rate cuts and a special booster package for industry; and Mr Basu travelled to Kolkata to appeal to the intractable Mamata Banerjee to support the opening-up of the retail sector to foreign investment.
Two things were quite noticeable from these meetings.
First, the three individuals at the helm of the confidence-building initiatives were all technocrats, uninvolved in the political decision-making of UPA-2. Secondly, the pro-reform pep talk by the three eminent economists wasn’t accompanied by any corresponding political initiative. Apart from home minister P. Chidambaram, who scored a self-goal with his gratuitous comments on middle-class selfishness, none of the heavyweights of either the Congress or its allies joined in the chorus. It almost seemed that economic reforms was a special obsession of the Prime Minister and disconnected from politics.
Indeed, the past week also witnessed a meeting of the National Advisory Council (NAC), the equivalent of Congress president Sonia Gandhi’s Star Chamber. Had the NAC made noises supportive of economic reforms, it would have been a tremendous boost to the self-confidence of Dr Singh and indicated that what was being argued by the economists also had the backing of the social sector activists who are so dear to Mrs Gandhi. Unfortunately for Dr Singh, the NAC didn’t deviate from its old script. To those in Lutyens’ Delhi accustomed to reading tea leaves, the message was clear.
Mr Khurshid spoke about governance and politics having got intermingled. In a democracy that is inevitable. When he presented his Budget last March, at a time when the government was looking distinctly fragile, Mr Mukherjee had one paramount objective: to ensure that the Finance Bill was passed in the Lok Sabha without too much fuss. Mr Mukherjee was, if nothing else, a deft political manager who was aware of the government’s limitations. He, therefore, chose to gloss over the details of how subsidies could be reduced without raising diesel and cooking gas prices. He was equally vague and disingenuous about how the fiscal deficit was to be reduced.
Today, Mr Mukherjee is being pilloried for his obduracy on retrospective taxes and his insistence on GAAR (General Anti-Avoidance Rules) — all indicative of a pre-1991 mindset of controls. There is no doubt that he is guilty as charged. But India’s next President was also clear in his mind that he had very little elbow room for reforms.
In particular, he was aware that reducing government expenditure was simply unacceptable to backbench MPs and to Mrs Sonia Gandhi who has her heart set on the proposed Food Security Act.
Mr Mukherjee took the line of least resistance and hoped that someone else would carry the can next year. No wonder he was so anxious to take the short walk from North Block to Rashtrapati Bhavan.
In trying to disentangle economics from politics, Dr Singh is trying to achieve the impossible. The harsh truth is that there is no consensus either in the Congress, the UPA-2 or for that matter in the rest of society over what exactly needs to be done to kickstart the economy.
Today, the problems have escalated to a point that neither foreign investment in retail nor the Pensions Bill will put India back on track. On the contrary, these moves are calculated to be contentious and trigger political turmoil. Governments can do what is needed in the first two years of an administration. The election season normally begins after 36 months. Tragically, the UPA-2 lost the plot even before the midway stage.