Getting our act together

8226; We have weathered the South Asian economic crisis, sanctions, a war, drought 8212; with little effect.

8226; Since 1956 we have been in the thrall of foreign exchange shortages: just the other day the Finance Minister announced that we would not be seeking official development assistance. A fortnight ago we pre-paid 3 billion in external loans.

8226; In spite of recessionary conditions in the world, our exports have grown this year by 15 per cent or so.

8226; We have had the worst drought in three decades: last time there was a severe drought, prices rose by 17 per cent; this year, they have risen by 4 or 5 per cent.

8226; The structure of economic activity has changed completely: 20 years ago, agriculture accounted for nearly 40 per cent of the GDP, and services for 35 per cent; today it accounts for a quarter, and services for nearly a half. Then agricultural commodities accounted for 40 per cent of our exports, today they account for 17 per cent.

8226; The frame within which economic activity is to be conducted today is completely, but completely different from what it was ten-twelve years ago.

8226; Even as these architectonic transformations have been brought about, the proportion of people in dire poverty have gone down from 36 per cent to 27 per cent 8212; much to the disappointment of some, the small sample estimates on which they were relying to cast doubt on the extent of reduction too have turned hostile witnesses!

8226; With foreign exchange reserves of 75 billion dollars, with these continuing to grow by a billion a month, with foodgrain stocks in government godowns of 60 million tonnes, we have the sort of wherewithal for swift expansion that we used to only wish for just a few years ago.

8226; There is a clearer recognition today that our potential is just about limitless: in sourcing 8212; from software to automobile components, garments to toothpaste; in being the provider of health facilities, engineering and technical education8230;In a telling address, Dr M.S. Banga pointed out that for a range of products capital costs in India are just 30-35 per cent of what they are in Europe, that conversion costs are 15 to 25 per cent.

The first thing that we must do therefore is to shut down one of our major industries: there is an industry in India, in Indian discourse of frightening others. The Green Revolution will turn red8230; The moment the Dunkel Draft is approved, we will have to pay royalty to multinationals on every twig of neem we use for cleaning our teeth.. .Chinese batteries are killing our battery manufacturers8230; Sri Lankan tea is8230; Cheap textiles smuggled from Bangladesh are8230; Vanaspati smuggled from Nepal is8230; The Green Revolution did not turn red. Chinese batteries were soon discarded8230; And there is the other point: if we can8217;t compete against Bangladesh, against Nepal in the Indian market, how in hell are we going to compete against the Chinese in Europe and the US? And have our exports not grown by 15 odd per cent in these very markets, in the face of competition from China?

So, we must stop frightening ourselves. But there is another side.

And yet Whenever we visit a country in Southeast Asia, we are filled with a compound of rage, of helplessness, of shame. A glimpse of what those countries have accomplished, of what countries with not a fraction of our resources, talent, size, entrepreneurship, have accomplished, reminds us of what we have not done. As does the scale of our needs.

As does the danger that lurks if we fail to achieve our potential: the growing economic distance between China and India will get translated into a growing distance between our respective military capabilities, and that will constitute an irresistible temptation to many.

What is holding us back? Not resources. Not enterprise. Certainly not ideas: there is scarcely an idea that has not been championed in India 8212; that we should free public expenditure: the forty-odd thousand crores foregone in the last decade to revive sick public sector units, the 35-40,000 crores we spend every year in subsidies, the six-seven hundred crores we spend every year on paying salaries of workers whose factories are physically closed and shut8230;; that we should tax pollutants and carcinogenics; that we should make allocations 8212; from the Planning Commission, from the Finance Commission 8212; a function of performance; that we could reduce the burden of taxes on several of our industries and make them more competitive by replacing what we collect from them by a sort of domestic Tobin Tax on transactions in the stock markets8230; from these to ethanol and other virtuous fuels8230; Which is the idea that has not been advanced and advocated in India? Thus resources are not the impediment. Talent is not. Ideas are not. The impediments to faster economic growth are all outside the economic domain. The ones that in my brief exposure to Government I encounter most frequently are three.

The third-class compartment mentality

First, the existing blocs of power: industrialists who are already in a sphere, controllers of unions. Those responsible for formulating policy encounter these every day: we want lower import duties for all products except those we ourselves produce; we want Government to open up doors for foreign investment, but not in newspapers; we want Europe to open its doors to our IT professionals under Mode IV, but we will naturally not allow foreign law firms or chartered accountants to practice in India.

It is the familiar mentality. When we are on the platform, we strain and shove and push to get into the compartment. The moment we are in, we join in keeping others out. As they did during the licence-quota period, these entrenched interests are able to use the State machinery and the personnel manning it, they are able to use instruments of public discourse to thwart reform.

By invoking nationalism 8212; the ones doing this are often the very ones who in their newspapers, to cite one instance, have done more than anyone else to make nationalism a dirty word!

By stoking fears of job losses 8212; when in fact the surest way to ensure collapse of jobs is to arrest change and improvement in existing units, the surest way is to wrest from Government artificial respirators for these units and industries.

By learned legal arguments 8212; see, for instance, the finesse with which in telecom each side invokes estoppel these days.

By pasting allegations and motives on every decision.

All of us can help blunt this obstruction.

8226; We should not confuse, we should puncture every attempt to confound a particular interest, an entrenched interest with the public interest.

8226; We should strain to convince every India that our heckling is not going to stop time, that our competitors are not going to slow down because we have not sorted out our internal problems.

The political paralysis

The second impediment, the much more serious impediment, indeed the operational constraint, so to say, is the log-jam in the political arena. Fractured legislatures, the quality of persons in public life, half the political class forever out to denounce and obstruct whatever it is that the other half is doing.

The solutions again are obvious: the two principal parties should cooperate so that economic policy-making is not mortgaged to fringe groups; those who are in office irrespective of parties in the central and state governments face the same problems, they gravitate to the same solutions 8212; they should get together; governments should not wait for that will-of-the-wisp 8216;8216;consensus8217;8217;, they should push changes in the conviction that ten years from now there will be a consensus around the new constellation that would have been brought about by these steps.

Each of us should of course do every little thing we can to nudge leaders in these directions. But your guess is as good as mine about whether we can be hopeful in this regard. Moreover, the matter transcends individuals. Even if the principal leaders who control the principal parties or the states and Centre today were to agree and coordinate, they may soon be replaced by others who are not inclined to do so 8212; indeed, whose self-definition is in the Pakistani strain, that he is not the other!

The difficulty is fundamental: it lies in the type that the present political system is throwing up; it lies in what they have made of institutions of governance. I do feel therefore 8212; and of course this is just my personal view and not the agenda of any party, much less of the Government 8212; that we must recommence discourse on the political system:

8226; Should we have a directly elected Executive?

8226; Should we continue with the present arrangements for selecting the head of the Executive, but enable him or her to induct a proportion of his colleagues from outside legislatures? Has the world not become too complicated, after all, for non-specialists to run vast and vital ministries?

8226; Should we switch to the German provision about constructive votes of confidence?

8226; Should we have another variant 8212; in which a legislature may vote out an individual minister, even the Prime Minister but the Government as a whole lasts its full term?

8226; Should elections to all levels 8212; from panchayats to Parliament, or at least for all Assemblies and Parliament 8212; be held simultaneously?

From such questions to the smallest ones bearing on the functioning of the system 8212; should the Question Hour not be at 5 pm? Should the Zero Hour not be at 6 pm? Better still, in this age of Information Technology and e-governance, why not conduct the Question Hour by email? 8212; we should commence public discourse on all of them.

After all, it isn8217;t that once the Constitution was adopted, discourse about alternatives stopped. Quite the contrary: from JP to B.K. Nehru and L.P. Singh, the most thoughtful and sagacious of our thinkers and practitioners proposed several alternatives. A great opportunity had opened up when Government appointed the Venkatchalliah Commission. That golden opportunity was scotched 8212; by the Opposition on the charge that the Commission was but part of a secret plot of the ruling coalition to overturn the Constitution; by the Commission itself which limited itself to minutiae; by the rest of us who have just looked the other way.

We should recommence the discourse. At the least it will dispel the notion that we are ordained by some Divine Writ to just this arrangement, and the consequences we have brought upon ourselves through it.

Till that discourse yields something, we should:

8226; Use every opportunity to continue the main thrust of reforms since the early 1990s 8212; that is, to go on reducing the role of the State in our lives, specially in our economic lives;

8226; Use every opportunity to insulate institutions 8212; public sector enterprises, public service commissions 8212; from the political class;

8226; Use every opportunity to continue opening India up to the world 8212; that will compel an improved work culture; plunged into water we will master swimming.

8212; The above is from the text of the speech delivered by Union Minister for Disinvestment, IT and Telecom Arun Shourie at the recent India Today conclave.