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Govts must explain, explain, explain. Potential beneficiaries of reforms are unorganised, they don’t know they will ultimately benefit: Arun Shourie

Arun Shourie, one of India’s leading public intellectuals, is a journalist, author and economist.

Written by Shaji Vikraman | Mumbai/ New Delhi |
Updated: July 13, 2016 9:57:05 am
Arun Shourie, indian economy, 25 years india, 25 years of indian economy, opening of indian economy, 1991 economic reforms, 1991 economic crisis, manmohan singh indian economy, pv narasimha rao, rbi, indian rupee, indian rupee against dollar, indian currency rate, indian currency, rupee rate, rbi, indian rupee value, india economic crisis, global credit rating, rupee value, foreign currency, rupee devaluation, business news, currency market, business market, stock exchange, latest news Arun Shourie with his then senior BJP colleagues Atal Bihari Vajpayee and Murli Manohar Joshi in February 1993. (Express Archive)

His doctoral thesis was on administrative socialism — a reflection of his opposition to the licence quota raj. After he joined the government as cabinet minister, Arun Shourie set about implementing some of the things he believed in. He had worked as an economist with the World Bank at the start of his career, and in the early 70s as a consultant to the Planning Commission. After the Emergency in 1975, he started writing, and went on to edit The Indian Express, spearheading several investigations by this newspaper. He was a Member of Parliament between 1998 and 2010, and was Minister for Disinvestment and Telecommunications and Information Technology in Atal Bihari Vajpayee’s government. In this interview to The Indian Express, Shourie says it is important for Indians to recognise the calumny against reforms over the last couple of decades, whenever a fresh round of reforms has been attempted.

Over the last 25 years, since the start of the reforms programme, how much ground have we covered?

Compared to the 1980s, there has been substantial change, but far, far less than what could have been done, and should be done. In the 80s, China’s national income and per capita income was below that of India. But today, it is four-and-a-half or five times more. They started reforms in the late 70s, and we waited for a breakdown. They persevered. We have done it in fits and starts like during Narasimha Rao’s time, in Vajpayee’s time, and a bit during the first term of Manmohan Singh.


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You had charge of the Telecom Ministry and Disinvestment when the Telecom sector was in turmoil. How was the mess sorted out?

By the time I took charge of the Telecommunications Ministry, the sector had collapsed. But the government had already taken a decision to move towards a revenue sharing regime — which was then described as a big scam. But if that single decision had not been taken, we would not have had the kind of growth, the revolution, in the telecom sector. And when the regulator, TRAI, said at that time that India would have 100 million subscribers, the response was, kabhi ho hi nahin sakta. The cellular operators and the GSM chaps were fighting against each other and also against the government. I made them withdraw those cases and told them, you compete in the market. The pager companies wanted a subsidy of Rs 700 crore. But not only did we survive, the government got unimaginable revenues after that. We also took a strategic decision. BSNL and MTNL were being deliberately suppressed to help the private sector. I called the CMD of BSNL, Prithivipal Singh, a dynamic chief executive, and the MTNL chief, and told them to go to the non-metros. We signed an agreement with the Railways when Nitish Kumar was the Railway Minister to put up towers, so that when you leave the metros, connectivity is provided by these state-run companies. One of the ways to discipline this sector or whip it into faster growth was to use these two companies for rapid expansion and cutting rates, which were up to Rs 32 per minute. So how do you do it? Well, BSNL removed all rates. We managed to beat down the private sector on call rates because of this. It was a leadership decision.

What are the lessons from that experience of changes brought about 15 years ago?

One lesson is that governments must explain, explain, and explain. That is because the potential beneficiaries of such reforms are scattered and unorganised, and they don’t know that they will ultimately benefit from such reforms. And those who are hit will be better organised. We again and again rejected their arguments. India has a farmaan mentality. The second lesson is that the worst obstacles to reform come from incumbents. The telecom sector benefited tremendously from competition, unlike the power sector. The other important lesson for Indians is to go back and read the calumny against reformers during each round of reforms, and assess whether there was any basis to such calumny. Just look at telecom and disinvestment.

On disinvestment, what were the changes carried out initially?

We sanitised the procedures. There had been a disinvestment commission under Mr G V Ramakrishna and they were slightly old fashioned, if I may say so. At that time it was difficult to think of what the aluminium prices would be and what should be done on BALCO. Then, on Hindustan Zinc, they said zinc is used for defence so it should not be divested. But our officers in the disinvestment department — all of us working together, who were able to formulate the procedures, to formulate decisions, to formulate bidding processes — had great knowledge about the market. Some of the independent financial advisers we had for objective advice told me that your officers know more about the markets than us.

On disinvestment of state-owned units, there was major resistance from within the government, isn’t it?

Oh yes, absolutely. Not so much in the party, but certainly [in the government] because every minister regarded these enterprises as a part of his empire. [For instance,] the Ashoka Hotel, you looked at the prime property, but you couldn’t divest it. And whenever we would start on the hotel, there would be some demonstrations and some bidders would be driven out when they would go for inspection. Even to think that at Janpath [hotel] or Kanishka [hotel], there was almost a situation of physical violence, and it was certainly not [triggered] only by employees.

I remember calling the head of intelligence at that time and asking him that how is it that when every hotel in Delhi is making money, this (Ashoka) is the best property and they are [still] losing money? And you can’t touch it, because immediately opposition starts within the cabinet? He said, Sir, you can stand on your head, but you can’t get this done. That’s because first, there is a 15% cut on everything, and it goes right to your minister. Second, he said, 6 rooms are reserved. They are constantly shown as under repair but are used for collateral activities. Third, the ministers and civil servants will have a wedding reception and call 600 guests but will charge for 250 guests. Then, he said, there are 300 illegal quarters behind Ashoka. They still exist. He said no Delhi politician will allow you to remove it because his votes are there.

Then there is the Samrat hotel. It is still there. Vultures are sitting inside, but you couldn’t disinvest it. And there was this great, great fight on the question of disinvestment of Maruti. Mr Manohar Joshi was the Minister for Heavy Industries, so it was part of his empire. But he would not be present at the meetings. The idea was that the Minister in charge of that enterprise would also attend the disinvestment meeting. But he just would not come, and we had to postpone each time, and I think it happened half a dozen times.

So, more than a decade later, how do you look back on your experience in government?

First, it was the political support which I got from Vajpayee to carry out changes, and the solid support of Finance Ministers Yashwant Sinha and Jaswant Singh. When the text of the Essar tapes is published, it will show how many who were blocking reforms in the government were in touch with many other collateral interests. Second, when it comes to reforms, you must give confidence to your civil servants that they can talk back to you or disagree with you. Third, the Minister must take responsibility for his actions. In the UPA, everyone wanted the other to take responsibility. So, when the CBI probe against me was on, I told them in front of the Telecom Secretary that he knows more than me, but whatever decisions are taken, I am responsible. The fourth lesson is that Ministers must apply themselves to details. That will keep civil servants on their toes — and I mean this in a positive sense — so they will give their best. Now, ministers are looking for photo-ops rather than working on details. In the Vajpayee government, it was completely different, in that at least four or five ministers, the principal ones, went into details and applied themselves. And the final lesson is that the word of the government must be credible. Today that is not the case — be it on targets achieved, GDP figures or sugarcane dues. They turn out to be different. Why was Raghuram Rajan so important? Because his word was believed, and not that of the government.

But what was the level of political support to reforms in general?

It was total. Vajpayee was the man who really changed the direction of India. The task of a leader is like the man who sits on top of the two-storey box outside the railway station. He pulls one lever so that one train goes to Chennai, and another to a different city. Unfortunately, today, the leader is immersing himself in doing everything other than setting the direction in which way the country should move.

25 years later, what needs to be opened up?

As Dr Y V Reddy said, it is not about opening up. There has been a great decline in the quality of people manning institutions, be it the legislature, courts, civil servants. The respect among institutions of the domain has also gone down. We need to attend to this. Look at the financial sector, the non-action on the Justice Srikrishna Commission report, and the tardiness of the system. The heart of the matter is that we need to have the best of people. And institutional reforms are the key. There are two things on this: manning the institutions, and the process. The Raghuram Rajan episode is a setback to the idea of getting professionals into senior positions in the government. The signal that it sends out is that there is no place for people with domain knowledge and who are not dependent on the rulers.

Over the next 25 years, what should be on the agenda of governments?

The most important thing is to think of the tectonic changes that would have taken place by then. We must imagine 25 years from now and engineer it to back what we should be doing now. Look at the Make in India hype. It is about brick and mortar. Unfortunately, we are doing more of the brick-and-mortar when all that is becoming obsolete with nano technology, robotics, artificial engineering and 3D printing. China is today the largest buyer of robotics. All these will render the current model obsolete. The underlying philosophy of reforms is to reduce the role of the state and enhance the role of the society. But now they are increasing the role of the state to almost choke society. The direction of reforms is being reversed in a basic way.

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