After a period of policy paralysis, UPA II seems to be in an active mode to revive the India story. How do you see the recent initiatives taken by the government?
A policy like encouraging foreign direct investments is a positive step. But it is too late in the day.
Why so?
Probably it is not an appropriate time since it is the last year of the government. What I am saying is that whatever policy decision you take now, its implementation will be a problem.
What according to you is not appropriate about these decisions?
Governments all over the world have problems implementing tough decisions in the last year of their term. Every government has to gear up for the elections. Added to the negative sentiments on lack of economic reforms is the absolute governance deficit that has plagued the UPA II government. Both foreign and domestic investors want decisions to be implemented. Bureaucrats, however, do not want to take decisions. There are reasons for this. One-the series of scams where bureaucrats are getting involved or dragged. So they do not want to take tough decisions. They simply avoid risks. They follow delay tactics. Till elections, nothing much will move forward. More importantly it is the question of political stability of this government.
The UPA II is managing to drag on. But technically it does not have the majority after Trinamool Congress led by Mamata Banerjee and Samajwadi Party led by Mulayam Singh Yadav walked out of the government formally. So they are in minority. Moreover, bureaucrats will never allow the government to take measures now. Tomorrow when the new government comes they may be required to answer questions.
Is the government not taking actions as compared to say two years ago?
But what’s the point now? That is my question. It should have been taken when the government was under control. It is no point taking a decision when it is not going to be implemented. Policies already approved are not operational yet. Government machinery is not operational. Leading bankers have also pointed out governance deficit.
So are you saying there is no question of an economic resurrection before a new stable government takes its place?
If the government and Congress Party – which is a national party and known for not letting down the country’s interests – are really interested (in economic revival), the best options before them is to go for elections. People can have some clarity. They know well they have no chances of coming back unless there is a miracle. Of course it is a different question who will replace them. When Prime Minister P V Narasimha Rao was PM, he knew Congress would not make it to office when the government’s term ends. So he initiated a probe against politicians in Hawala scandal including against L K Advani who was then emerging as a prime ministerial candidate in post-rath yatra period. Advani’s name was inserted. It was not in the original diary notings. He just wanted to scuttle the chances of Advani. In case of BJP, ascendancy to power let a liberal man (read AB Vajapayee) to lead the country. Today, Congress is not working on broad issues…There is a lot of possibility that the next government may not be stable and would be like the United Front Government.
What are the measures that you would suggest for reviving India and the India growth story?
As I mentioned earlier, political stability of the government is must. Only then it can initiate reforms and measures which investors – both domestic and foreign – can look up to in India. It is an unfortunate situation. Investors will continue to have apprehensions over investing in India over the next couple of years. Kumaramangalam Birla and Ratan Tata have mentioned how they are looking for opportunities to invest abroad. This will continue.
What other concrete measures are must for a revival story?
See, many people may not understand the depreciation of rupee. It is a matter of demand and supply function. If you want to increase the supply of foreign currency, one channel is to attract foreign investment either through FDI or FII. For that, you need to have a stable economy. Plus a positive attitude and action. Some measures are needed on import of oil. Government is not in a position to give a call on optimum use of personal vehicles and use public transport. No doubt agriculture needs to be given top priority. India needs to work on second generation of reforms on improving the user charges for public utility services. Subsidies should be for poor people and not for everybody.
Given the culture of providing subsidies to one and all, can a stable government push tough measures?
It requires a strong and bold leadership with integrity and intelligence. Someone who enjoys people’s confidence. Why did people follow Prime Minister Lal Bahadur Shastri’s call to skip a dinner every Monday? I still remember as young students we followed it. First generation of reforms was more to do with institutions. Second one is more difficult as it involves people. So the government needs to have a good communication strategy before bringing reforms.
