More than the exit of Pranab, it is the freedom from Mamata that lends the prime minister some hope

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The political rejig could give Manmohan a chance to push through big-ticket reforms.

By Ashok Malik

Ashok MalikIN A capital city that thrives on gossip and rumour, whispers have been loud in the past few weeks that Prime Minister Manmohan Singh has been secretly praying for Pranab Mukherjee’s elevation to the presidency. This would give the prime minister that much clout in the finance ministry, the logic went, at a time when the economy was tanking, consumer confidence dipping and the overall investor environment getting decidedly foggy.

There are multiple messages and multiple ironies written into that story. It speaks of the prime minister’s lukewarm control of his government, even on matters of economic policy. It speaks of the larger-than-life aura surrounding Mukherjee in the UPA framework, one that has even his notional boss thinking twice before telling him what to do. Mukherjee, after all, was Manmohan’s boss 30 years ago, when the Bengali politician was finance minister and the Punjabi economist only a bureaucrat.

This has meant Mukherjee has had enormous autonomy in the government. There were standing instructions in the Prime Minister’s Office that any request for a plane for the finance minister should be acceded to without checking with the prime minister — a privilege no other minister had. At a more serious level, there were limitations to how much the prime minister could tell his very experienced finance minister in terms of how to write the Budget speech.

For example, there has been disquiet in circles close to Manmohan as to how Mukherjee allowed the retroactive tax to acquire such a looming presence in the Budget and post-Budget period. A finance minister has to reconcile the needs and demands of two key divisions in his ministry: the Department of Revenue, which taxes economic activity and raises money for the government; and the Department of Economic Affairs, which facilitates economic activity and growth. An astute finance minister doesn’t allow the concerns of one department to unduly override the other. Mukherjee’s Budget this year seemed to have lost that fine balance.

While the departure of Mukherjee may redress some of the immediate atmospherics, what does it mean for the larger body of economic reform? To be fair, the President-in-waiting has scarcely been a culprit in blocking growth-oriented or business-friendly policy change. Two years ago, he was warning his Cabinet colleagues about the subsidy surge, the challenge of runaway public spending and how the then environment minister was sending the wrong signals to corporate India.

As coal blocks and whole coal fields were cut off to mining and power companies, in some cases years after they were sanctioned, a power crisis just ballooned, Mukherjee has been pressing for a pragmatic solution. In this, the prime minister has not found him an unwilling partner.

MORE THAN the exit of Mukherjee, it is freedom from Bengal’s other big politician — Mamata Banerjee — that lends Manmohan hope. The Trinamool Congress has resisted the opening up of multi-brand retail to foreign investment and most recently the Pension Bill. Will these be easier to push through?

Two caveats need to be entered here. First, it would be prudent to distinguish between executive and legislative policy change. An appreciable increase in diesel prices (maybe even Rs 3 or Rs 4 a litre) can be expected in the coming days and will make a dent in the government’s subsidy bill. Manmohan may well revisit the FDI in retail effort as well.

However, Mamata’s imminent departure from the UPA — and her replacement by the notoriously unreliable Mulayam Singh Yadav and/or Mayawati — also makes the government that much more vulnerable in Parliament. Legislation for liberalising the pensions sector, insurance and mining — all of which reformist economists recommend — will continue to be tough, if not be rendered tougher. Mobilising a majority in the Lok Sabha for each such Bill is going to drain the government of greater political capital than the Congress may want to spare.

This brings us to the second caveat. After three extraordinarily wasted years, is the Congress any closer to ending its cussed unwillingness to embrace the politics of growth and aspiration, as opposed to that of permanent victimhood? That is the real question confronting India. Answering it is beyond both today’s PM and tomorrow’s president.

Ashok Malik is Contributing Editor, Tehelka. 
ashok@tehelka.com

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