Opinion Behind the drift

True,the magic of any verdict,no matter how great the electoral story behind it,never lasts in politics. But remembering May 2009 now,just a year-and-a-half into UPA 2’s five-year-term,it’s quite shocking to realise how little,if any,of that good story survives. Almost as surprising is industry’s strong disaffection,a good example of which is perhaps Deepak Parekh’s caution.

India’s private sector was among the key stakeholders that bought into that May 2009 good news story. If Parekh’s critique is representative of broad and deep industry disaffection with the Congress,it matters a lot. Frequent-phoning corporate lobbyists and frequent-fighting corporate groups and all that these headlines imply do nothing to take away from the fact that the one good story now — India’s economic growth — is thanks to,as it has been for the past decade or so,the dynamism of private investment.

There are crooked capitalists,sure. There are crony capitalists. There are perhaps cartel-forming capitalists in some sectors. So catch them and bring them to justice. Rich crooks from the private sector should suffer the of the law.

Those are not the reasons why business may be beginning to lose confidence in the Centre’s ability to see the big picture,to use a term Parekh used. The short-term reasons for industry’s apprehensive interrogation of the Congress-led government’s abilities are linked to a longer-term reason,something that goes right back to the immediate aftermath of that remarkable May 2009 victory.

The Congress decided not to add to its policy conversation after it beat anti-incumbency. No one expected the Congress to reduce the emphasis on government expenditure-led welfarism. Whatever the economic critique of some aspects of this strategy,the political imperative was well understood. What was surprising to close observers of UPA 2,and industry should be counted among them,was the Congress’s evident reluctance to take advantage of its new political stature and add a robust recognition of the private sector’s importance and imperatives to its policy conversation.

The political costs of doing so would have been vanishingly negligible. The policy costs of not doing so started becoming apparent very soon after the verdict. Barring tax reforms — the direct tax code and GST,both of which were continuation of earlier efforts — the government seemed disinclined to appear as a facilitator and rule-reformer for private investment. Such a role,it seemed,had been deemed politically incorrect by the Congress.

To take an example,look at the energy the government expended on pushing the nuclear liability legislation. It engaged in a robust debate knowing that it was broadly on the right track,and it incorporated some sensible points made by critics in and outside Parliament.

Obviously,new nuclear liability rules are important and deserved government energy. Obviously,too,there’s the big economic dimension in this policy. But it would not be unreasonable to argue that it was the broad foreign policy imperative that came from the nuclear deal India successfully negotiated under UPA 1 which explained government energy expenditure on this issue. Contrast that with the anaemic or non-existent efforts to push plain vanilla economic policy issues. Did the Congress test the BJP’s political maturity by explicitly inviting it to support long-pending bills on insurance and banking? These have become such boring topics that any mention of them produces yawns in all forums. No one seriously thinks the Congress is serious about all this. Or take the Congress’s comfortable capitulation to allies on the land acquisition and rehabilitation issue. And Jairam Ramesh would have been unlikely to have become the Jairam Ramesh we know now had he not drawn political sustenance from the government’s seeming determination to not add to its policy conversation.

Even more remarkable is Prime Minister Manmohan Singh’s failure,or reluctance,to put his imprimatur on a big economic policy. We don’t really expect Dr Singh to excite economic policy imagination any more. That’s a damning verdict on the Congress and its returned-to-power government.

And it was because big thinking on economics was not given political backing in UPA 2 that the first set of big,bad stories in this government’s tenure has created such an apprehension about its policy drift. The drift was virtually a product of a conscious political decision post the May 2009 verdict. In December 2010,the months-long drift plus weeks-long bad press make for an awfully unappealing combination. Therefore,when Parekh says the prime minister should get the big boys to pull in the same direction or that the big picture must be recognised and ministerial energy must be devoted to it,one can easily sympathise,but one should remember that the Congress never seemed inclined,post-victory,to see the big picture.

Will the government add to the policy conversation? There’s plenty of time. Plus,a BJP that’s absurdly conflating parliamentary paralysis with effective oppositional tactics actually leaves a space for the Congress to intelligently exploit.

The answer depends on whether the Congress absolutely believes that its political strategy can’t afford to include its government clearly and consciously signalling its intention to act as a facilitator and rule-reformer for private investment. It is,frankly,frightening to think that the answer may remain “no” for the next three-and-a-half years.

saubhik.chakrabarti@expressindia.com