Opinion UPA’s mid-life ennui

To make matters worse,the Opposition seems to have lost its plot,frittering away opportunities to bring the ruling party to the dock. It is more divided than ever,and in the process,has left the UPA — Congress and its allies — complacent and a bit arrogant. Mamata Banerjee’s Trinamool Congress is unpredictable and M. Karunanidhi’s Dravida Munnetra Kazhagam is more concerned about plum ministries. The Congress itself has been more than willing to make compromises in a bid to stay in power. The way it handled the Budget in Parliament — bargaining for BSP support by letting Mayawati off the CBI hook during a BJP-sponsored cut motion — is ample evidence.

Like markets where the current value of a company’s stock is dependent on future earnings potential,and inflationary expectations matter more than the current inflation rate in the conduct of monetary policy,so it is with governments. The government’s stock today is more about what can be realistically expected from it in the next four years than what it achieved in the past one year. Unfortunately,not many are convinced about big-ticket reforms seeing the light of the day,despite India having a pragmatic economist as its prime minister,a seasoned politician as the finance minister and a forward-looking reformist as the deputy chairman of the Planning Commission. Forget economic reforms,there are no milestone-linked programmes to ensure long-term socio-economic prosperity either. When did we last hear of an objective and targeted plan to address critical issues of poverty,unemployment (linked to it,skill development) and housing (given large-scale rural-to-urban migration)?

There is a feeling,now rife,that the government is increasingly ignoring serious issues,or relegating them to the backburner. Many big-ticket items have been conveniently moved from the “to do” list to the “can wait” list. Drawing the wrong lessons from the global crisis,the government has put financial sector reforms on the backburner. In infrastructure,power and ports are two vital areas that have only seen deterioration. Little to no reforms have already raised electricity costs in India to one of the highest in the world. This will only cripple industry and render it uncompetitive. It beats logic that ports — important from a strategic and geo-political point of view — are being ignored despite India not figuring anywhere even in the Asian pecking order. Global crude oil prices may be low enough — at $70 a barrel — to let oil PSUs adjust fuel product prices on its own,but there is no semblance of any urgency to dismantle the administered pricing mechanism. Neither is there any will to move — be it slow and calibrated — ahead on lending industry some more flexibility in hiring labour without diluting any aspect of workmen’s social security net.

In UPA-I,there was significant business being done despite the Left parties,who had very strong ideological views on issues ranging from labour to the financial sector. To handle tricky issues,the government set up many groups of ministers (GoMs). The GoMs,originally conceived by the BJP-led National Democratic Alliance,became an institutional mechanism under the UPA coalition. Pranab Mukherjee,who chaired about 55-56 GoMs in UPA-I admits that the mechanism works well and plays a significant role in carrying the government agenda forward. In UPA-II,he chairs only about 25 GoMs,a sign perhaps of the government’s overall lack of interest and urgency in pushing the envelope on issues where there are divergent views.

But,let’s give the UPA its due too. The least the Indian people expected from Manmohan Singh (now guru to US President Barack Obama) in his first stint as prime minister was that he would ensure a quick take-off of the country’s trillion dollar economy after the global crisis. His government delivered,without any knee-jerk reaction to events that spread panic across the globe and made even the most advanced economies resort to protectionism. The US financial crisis in 2008,that spilled over to the real economy,tested the innate reform credentials of all global leaders. Singh and his lieutenants Montek Singh Ahluwalia and P. Chidambaram were steadfast in their liberal beliefs and steered the Indian economy out of the crisis with least damage. In 2008-09 and 2009-10,when most global economies contracted,India grew 7.5 to 8 per cent.

But,as I said,equity is more about future capability than past laurels. UPA-II has to make the right moves to restore the reformist credentials of its top leaders.

pv.iyer@expressindia.com