Opinion So that nobody feels cheated
The government must lay down transparent and clear decision-making norms. It cannot use its prerogative to frame policy as cover
Cassandras can jolly well say these arent reforms. This is the best show from this government and we have eight years of no-show to prove it.
But without being planned a much bigger reform has begun to take shape. The contours are still hazy,which is quite appropriate for a work in progress.
The reforms are the putting in place of restrictions on and transparency in government actions to determine the economic agenda of the country. These were not thought through but they have become far more significant than the foreign investment relaxations announced last week.
These reforms have occurred as a follow-through on each of the corruption-court-cancellation episodes of the past few years. Since the government did not plan for them,it has been forced to acquiesce in them because of the circumstances. This is also the reason why they are also under the threat of being rolled back now that the government has mustered the courage to bring in the more mundane pieces of executive action. Because of the favourable press for the latter set,old habits have resurfaced within this government barely weeks after it began functioning again.
Cabinet ministers have begun hitting out at the right of constitutional bodies,including the courts,to question government actions. Thursdays order by the Supreme Court,giving back the executive the right to decide if auctions are necessary to allocate natural resources,could add to the fury. The court,however,says auction remains a valid option and allocation of public good can never be free of cost.
Yet this week,Telecom Minister Kapil Sibal made out a case that the entire gamut of court action in telecom licences has only pushed back the governments plan to bring it within the reach of the aam aadmi in a few years,ruined investment climate and dragged the government into arbitration with chagrined foreign investors. His counterpart in the coal ministry,Sriprakash Jaiswal,has pointed out that auction of coal blocks will raise the price of downstream electricity and steel.
Yet,this is not about individual ministers flailing about the fetters being put on their right to (in)discretions. The Union governments scale of action has become of continental dimensions,as it must for an economy whose size is about to reach $2 billion.
In just a decade,the government has begun to dole out licences,change the extent of operations and basically extend favours or withdraw them on a proportion for which neither the private sector nor the government was prepared.
As an example,till 1999,the oil ministry gave out only 42,000 square kilometres of oil and gas exploration blocks. Just in the ninth round exploration and licensing policy in 2012,the government has offered double that,at 88,807 sq km to domestic and global companies. The cost of error in operations on this scale will be humongous,even with the best of intentions. This is not an argument about who has the right to question a policy which Congress party members are clothing themselves in.
What Sibal,et al seem to believe is that the government machinery is extensive and deep enough to ensure all corrections for errors can be carried out in-house with little or no cost to the economy.
If that were so then there is a major problem staring at us. The government has begun setting up mammoth investments in infrastructure through the public-private partnership policy. Surely,this is a policy and,unless the government changes,the ministers have the right to carry on with it.
But in the execution of this policy,government officials have to formulate rules about how an investment will be awarded and also answer queries about how transparent those rules are. These cannot by any stretch be clothed as policy decisions. Extension of this argument will make the execution of the Commonwealth Games too a policy decision. But the government has used this cover as a norm,till recently. It has,for instance,allowed neither its own officers nor any auditor to inspect the working of these investments,except under protest. That the auditor has made a hash of some of these inspections is a different issue. One of the major reasons for that is because the inspections have had to be fairly stealthy operations.
Yet,these reforms have progressed. A few years ago,the Central government set up a group of ministers to decide on the pricing of natural gas,though it was primarily a dispute between the Ambani brothers. The decision was taken on a specious plea that all gas and other natural resources extracted in India are the property of the government,with the private parties just concessionaires. Taken to its logical end,the pricing of telecom services,coal and just about anything else should also be determined by the government. From this it would follow that the CAG is right in ascribing a value to the notional loss to the government from the coal block allocations to private parties. After the events of the last two years,it will be difficult to envisage that the government will undertake a similar misadventure.
These then are the deep-seated structural reforms that have begun to clean up the cobwebs of non-transparent decision-making. The reason why the government is not getting cowed down by the operationalising of the Koodankulam nuclear plant is the broad-based investigation which preceded it. The naysayers,for instance,have not been able to offer any reason why a Supreme Court verdict should be disobeyed.
At another level,the reforms in diesel subsidies is along the same lines. These subsidies have been with us for a long time and were reinvigorated by the UPA government when it dismantled the just developing free-pricing of oil products. But it was the greater transparency shown by finance ministers like P. Chidambaram that brought home the enormity of the problem.
Surprisingly,Sibal and others have not questioned why rating agencies not based in India have asked the government to change its policy on subsidies,again supposedly developed to benefit the aam aadmi.
Yet it is possible that ministers are able to claw back the space these reforms have generated for entrepreneurship to flourish. The foreign investment rules announced for multi-brand retail would need the government to help the companies acquire large tracts of land in urban or semi-urban areas to set up operations. Imagine the havoc a bureaucrat can wreak by following a sham rule-based system of decisions that leave no room for questions. Yet,reforms here can make the pricing rational,make them employment friendly and leave little room for any segment of the population to feel cheated.
subhomoy.bhattacharjee@expressindia.com
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