By Devesh Kumar
Prime Minister Manmohan Singh will need to pass difficult legislations, kick the sloth out of ministers, and bring Reserve Bank of India (RBI) to heel to revive an economy that has slipped back to stagnation.As many as nine bills have been returned to Parliament by the standing committee on finance, which is headed by senior BJP leader Yashwant Sinha. They have been pending with the Government for varying lengths of time. These include the Direct Taxes Code DTC ll, Pension Fund Regulatory and Development Authority (PFRDA) Bill, and the Insurance Bill. These would go a long way towards ushering in reforms in the taxation, pension management and insurance sectors.
The last two sectors have been gasping for want of funds. There is also the Land Acquisition, Rehabilitation and Resettlement Bill, 2012, which is pending before the Government after being returned by the standing committee on rural development. The legislation seeks to provide the right compensation for farmers whose land is being acquired either by the Government for wholly-owned or PPP model projects, or by private players.
On most of these bills, the Government will have to build consensus within the coalition, and with the Opposition. But there seems little hope, given the atmosphere of confrontation. "Relations between the Centre and Opposition-ruled states have become strained. Consensus on economic issues can emerge only when there is a political consensus. Cooperative federalism encompasses both politics and economy,'' argues Leader of Opposition in the Rajya Sabha and BJP leader, Arun Jaitley. To drive home his point, he cites the misuse of CBI by the Government to hobble its rivals, as in the case of Mulayam Singh Yadav, Mayawati, Narendra Modi and Y.S. Jagan Mohan Reddy.
The problem, leaders of both the Opposition and allies of the Congress agree, is likely to be compounded by Manmohan's inability to communicate with friends and negotiate with foes. "Unfortunately, after Pranab Mukherjee's exit, there is no consensus builder left in the Government,'' Yashwant Sinha contends.
How will Singh assert himself on the crucial matter of governance? It will require shifting non-starter ministers. The big cats of his Government are asleep. They are the first animals that need to be revived. Key areas are not being served efficiently. The irony is that his track record as a reformer of the 1991-vintage had taken a severe knock as the head of Government in the last five years. Almost all measures to usher in sweeping changes in the economy were put in the cold storage during this period. With the Government's credibility at its lowest, the Prime Minister has no choice but to make a last-ditch effort to salvage his image, and legacy.
"Manmohan Singh needs to instil animal spirits into the reform process and make us forget that an anagram of 'reform' is 'former',"says economist Bibek Debroy.
| The Government's report card on almost all subjects has been anything but satisfactory. Consider this: • Against the Eleventh Five Year Plan (2007-08 to 2011-12) target of generating an additional 62,374 MW electricity, the power ministry could only commission 32,762 MW during the period (a little over 50 per cent of the target). • In 2010-11, the road transport and highways ministry awarded contracts for constructing 42,932 km of highways at total cost of Rs 5,072 crore. The actual length built was 1,781 km. The situation was worse in 2011-12, with contracts for building 60,396 km being conferred, the total distance covered at the end of the year was a mere 2,248 km. • Planning Commission estimated that as of April 2011, there were 101 oil and gas discoveries under new exploration licensing policy (NELP) only six could start production. • Flip-flops by the Union ministry of Environment and Forests have slowed key investments. It stalled the $12 billion Posco iron and steel project, the largest single FDI investment in India, and Vedanta Resources plans to mine bauxite from the Niyamgiri Hills for its aluminium plant in Odisha. |
Union Road Transport and Highways Minister C.P. Joshi has been in charge of the ministry since January 19, 2011, while Sushil Kumar Shinde has been at the helm of the power ministry since 2006. S. Jaipal Reddy became the petroleum minister in the reshuffle effected by the Prime Minister in January 2011. Jayanthi Natarajan took over the environment and forests ministry in July 2011. Given that most of the appointments in the Union Cabinet have been made for political reasons, there is, Congress leaders agree, very little room for manoeuvre for the Prime Minister. Ministerial slots are distributed in keeping with regional sentiments, caste considerations and personal loyalty. Most of the ministers belonging to the Congress owe their allegiance to either Manmohan or the Congress president. In the case of allies, it is the leaders of alliance partners who finalise the names of their representatives. "It is unlikely that there can be a large-scale readjustment at this juncture. He can only do minor tinkering in portfolios,'' says a Congress minister.
With Pranab Mukherjee out of the finance ministry, the Prime Minister will also need to leverage his equation with RBI Governor D. Subbarao to bring down interest rates, give an impetus to investment and reverse the slide in the growth story. Mukherjee had an uncomfortable relationship with the RBI governor and, despite his constant nudging, the latter, in the past one year, consistently refused to lower interest rates. Just 10 days before he demitted office (June 26, 2012), Mukherjee dropped enough hints to suggest that he wanted a reduction in interest rates, but that did not happen in the quarterly review of the monetary policy on June 18. The RBI will have to reduce interest rates to rev up the economy. It will not be an easy decision to take, for, it risks inviting the charge that it was deliberately putting roadblocks in Mukherjee's economy revival plans.
"To imagine that Mr Mukherjee was running the finance ministry as an individual fiefdom and the Prime Minister had nothing to do with its decisions would be a serious mistake. He was privy to every decision that is being rubbished today,'' says Sinha.
"Management of political economy essentially requires a capacity in decision-making. You try to bring about a consensus, first, within your own party, and then, with the Opposition. It is essential that leadership is displayed. If the Prime Minister does it, it will be good for him and for the country,'' adds Jaitley.
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