An insight into how serious the Government is about reform.
Tavleen Singh, in her Sunday column in the Indian Express (Red Flag, so no Economic Progress), put into words what many have been feeling for the past year-and-a-half: “The most intriguing feature of the World Economic Forum’s India Summit last month was that both the Prime Minister and Finance Minister talked as if they were consultants to the Government of India instead of the GoI itself.” Singh hits the nail right on the head – neither Manmohan Singh nor P. Chidambaram hold real power. All they have been able to do over the past so many months, has been to “appeal” to the nation to, among others, grow at 10%. They have not been able to, on even a single occasion, outline what they will do to enable the nation to accelerate beyond the 7-8% growth it is experiencing – because they are themselves not sure what they will be allowed to do.
Most Indians are disillusioned with Manmohan Singh, for a second time. For years and years through the 60s, 70s and 80s he had the vision for India’s economic transformation but no power. When he did finally taste power as Narasimha Rao’s Finance Minister, he initiated reforms for 2 precious years from 1991 to 1993. Once India was no longer in danger of collapse as a result of the 1991 Balance of Payments crisis, reforms stopped, most of them half-implemented – some sectors half-opened-up, others untouched by reform. We did not realise it then; we were so deliriously happy to see the beginning of the end of the Licence-Quota-Permit Raj, that we really believed that the New Industrial Policy of 1991 was India’s Berlin Wall moment. In reality, we had been betrayed.
Today Manmohan Singh is the Prime Minister of India. Theoretically, he is the most powerful man in India, the most powerful man in the third-largest economy in Asia, the most powerful man in the second-fastest growing economy in the world. With such limitless power in his hands, we assumed that he would usher in that second wave of reforms the country desperately needed. Instead, we have been betrayed once again. Because Manmohan Singh as Prime Minister, like P. Chidambaram as Finance Minister, like Montek Singh Ahluwalia as Head of the Planning Commission, actually wields very little power.
P. Chidambaram has not taken a single step as Finance Minister to correct that fundamental flaw in India’s tax structure – that the tax net is way too small. There are just too few people paying for too many others. There are only 4 crore PAN applicants in the country, and only 1.88 crore people filed their returns last Instead, he takes the easy way out and attempts to sqeeze even more money out of existing tax payers. Evidence of that is the Fringe Benefit Tax. Oh, and political parties such as his Congress Party are exempt from it. Another example of arbitrary exemptions and eceptions making a mockery of our tax collection.
The Sonia Gandhi-led National Advisory Council “advises” the Government on most critical decisions. An admirable goal, except that these decisions usually defy economic logic. Consider the presentation that the NAC made to the Government in early December 2005. (http://us.rediff.com/money/2005/dec/07power.htm). I shall not reproduce the article here, except for a few statements. The NAC avers:
“Privatisation is not the silver bullet in power sector reforms. The experience of Delhi and Orissa have been disturbing”.
The presentation has also raised question over the efficacy of the Rajiv Gandhi Grameen Vidyutikaran (rural electrification) programme, terming decentralisation of energy projects as “hot air”. “There is no guarantee that this will succeed where others have failed,” it said.
The presentation also sounded caution on the question of nuclear energy production even after the recent accord with the US in this area.
“PSUs in the energy sector are important, and a multi-sectoral approach is needed to deal with the issue,” the presentation said.
The prime minister’s energy co-ordination committee and the Planning Commission are not considered adequate for the purpose since the former “deals only with energy security” and the latter suffers from “institutional overload and fatigue”.
Sonia Gandhi’s NAC does not trust the private sector. It would rather the Centrally Planned, monopolistic Public Sector continue to run the Power Sector in India the same way it has for the last 60 years, and somehow hope that we “double the country’s power generating capacity by 2012”.
We have already seen a review of the Electricity Act of 2003, which called for unbundling of State Electricity Board and allowed public and private organisations to compete freely. The results of this – in Delhi and Orissa – the NAC finds “disturbing”. Never mind that in Mumbai, areas serviced by Reliance Energy do not have to go through the horrible daily power cuts that the rest of the country, serviced by state-run electricity boards, does.
And why consider only the power sector?
In a recent interview to BusinessWorld India, the Petroleum minister Mani Shankar Iyer said “As a socialist, I would like to see ONGC regain its dominant position in India’s petroleum sector”. With this man and his ideology, can we ever expect any sort of meaningful reform in the petroleum sector?
I’ve already written about the Telecom Minister’s stand on private players leasing BSNL’s fixed-line installed infrastructure.
Just two weeks ago, in a pathetic surrender to vested interests, the Government set up yet another committee to review the entire bidding process for the modernization of the Mumbai and Delhi airports. The ostensible reason is that there are just two bidders for two airports, and that there’d be no competition. Ignore the fact that all foreign bidders dropped out in sheer disgust at the sloth the Government displayed when it dragged its feet over even commencing the bidding process, and the the Airports Authority of India scored somewhere around 50% on the evaluation scale when the cutoff was 80%. The real reason is that there are people who, for reasons of ideology or prospects of financial gain, would like to see the publicly-owned AAI get the contract and to a shoddy job of upgrading these airports to become “world class”.
This Government has, across each and every sector, not only stalled but even begun to reverse any attempt at reform. Perhaps we ought to have expected this exact behaviour. After all, the Congress Party’s ad campaign in 2004 did say “Congress purane din vaapas laane waali hai”.