Pranab didn’t trigger economy downturn

By Swapan Dasgupta

There is, it would seem, no place for gratitude in politics. It took the presiding deities of UPA-2 less than 48 hours after he left office to start the whisper that the ills of the economy are due to the man who will be the next President of India. For Pranab Mukherjee, the unkindest cut was the fact that the new revisionism seemed to be emanating from people close to the Prime Minister—a man whose job he saved on a number of occasions through his fire-fighting abilities.

Not that the calumny heaped on the outgoing Finance Minister is entirely unwarranted. Mukherjee didn’t trigger the economic downturn that is now contributing to the Government’s eroding popularity. However, his Budget last May certainly hastened the larger erosion of confidence in the India story.

Was Mukherjee, therefore, plain bloody-minded or still dreaming of the halcyon days of Indira Gandhi when the Government directed and capitalists bowed in submission? Alternatively, was Mukherjee the archetypal pragmatist who believed that politics was the art of the possible?

The past record seems to suggest that Mukherjee adjusted to the grim realities of coalition government far better than most Congress leaders who still imagine they are in a one-party government. In UPA-1, as External Affairs minister, he was berated for dragging his feet on the Indo-US nuclear deal. It was then believed that he was just too dependent on the CPI(M) to win his Lok Sabha seat. It was also suggested that he was too stuck in old non-alignment ways to be enamoured of closer ties with the US.

Whatever the truth, Mukherjee always played cautiously. I have always insisted that the over-arching philosophy behind this year’s Budget was charmingly simple: to get it through the Lok Sabha without too much fuss. He paid lip service to fiscal responsibility, genuflected at the altar of the anti-corruption movement by promising GAAR, reiterated the assurance of a Food Security Bill next year and waved the populist sword at Vodafone. The Congress benches cheered, the private sector was muted in its criticism and the Opposition didn’t quite find a specific issue to mobilise opinion against the Government. Even Mamata Banerjee couldn’t find fault.

That the Budget was a monumental exercise in evasion was undeniable. Yet, judging by the yardstick of political expediency, it was a masterstroke and this is becoming apparent with each passing day.

For the past three weeks, there has been a frenzied attempt by the PMO to suggest that the bad days are behind us, and that with the PM at the helm the country can look forward to a bout of purposeful reforms—the return of the proverbial “animal spirit”. ‘Just wait until October’, the country is being told, presumably because the dust from the presidential election and the monsoon session of Parliament would have settled.

Maybe we should wait until October to be told that January 2013 will be more propitious because the Himachal Pradesh and Gujarat elections will be over by then. Maybe we should wait for the next Budget in February for big bang announcements that will set the Indian tiger roaring.

But maybe, and just maybe, it is entirely possible that the PM is discovering to his cost that it is easier to talk reforms than undertake them. Take the small example of the Forward Contract Regulating Bill—permitting forward trading in specified agricultural commodities to ensure better returns to farmers—that was supposed to have been cleared by the Cabinet last Thursday. It was not even taken up for discussion because a Trinamool Congress minister had sent a letter of objection. By this logic, neither the Pensions Bill nor FDI in retail will be taken up because Mamata is opposed to both.

What, therefore, happened to the promised purposefulness? Why wait until Pranab Babu is ensconced in Rashtrapati Bhavan because the TMC is, in any case, unlikely to vote for him?

With 20 Lok Sabha MPs, Mamata cannot be entirely disregarded. But look at the alacrity with which Ajit Singh’s displeasure over an extension to the Director-General of Civil Aviation was met. And the Rashtriya Lok Dal has just four MPs and nowhere to go.

The reality which is gradually dawning is that the UPA-2 is such a leaky ship that it dare not risk a bout of turbulence. Reforms are not merely about getting more foreign direct investment and getting the foreign funds to remain invested in the country. It is also about managing government expenditure and lowering the quantum of subsidies. These involve decisions that are potentially unpopular to both a venal political class and to consumers, even if they contribute to the long-term good. Just look at the proceedings of the National Advisory Council to see whether these priorities are shared by Sonia Gandhi’s pet activists.

The over-politicised Planning Commission is trying to help the PM out by doling out largesse to Uttar Pradesh and Bihar in the hope of political returns. But put yourself in the shoes of Mulayam and Nitish Kumar. What earthly political returns can accrue by being seen to be associated with decisions that inflict short-term pain?

At the risk of crediting Pranab Babu will too much foresight, it is possible he knew the state of the wicket. Maybe the PM should tell his managers to temper expectations and on his part focus on baby steps to restore India’s confidence in India.


Sunday Pioneer, July 15, 2012