A year gone by..

How do you feel when you Prime minister is an Oxford and Cambridge Economics graduate, When your Finance Minister is an Harvard alumni , when your Finance Secretary is a oxford economics and your president himself is amongst the top notch nuclear scientists of the world?


Rest assured.

Between Singh and Chidambaram we have what is hailed as the biggest economic reformist (1991) and the presenter of the Dream Budget (1997) We have all the required technical , political , economical social expertise in our hands. For once it really seems that the hands who giude the future of our country are not just the pot bellied acidically corrupt Gandhi-cappers ..
but are really highly knowdlegable, hugely sucessful people whom you can trust.. whose visions have spurred revolutions and whose thoughts have inspired huge successes.

But as its one year since they have assumed office. The first semester results are out. Can we the people take out the report cards from their bags ? and see the As and the Ds? Has the Government really done well ? Have we zoomed to our progress path the way we should have?


I guess not.

After a year back in power, Congress is still working out how to use it. Our reformist prime minister has done remarkably little reforming.


Remember?
A year ago, it was the biggest surprise reversal of the political world. The "feel good" campaign had backfired. The Congress though having failed to secure a majority at the general election, had managed to string up a 17 member strong rag bag of a coalition it now heads. Inspite of all the horse trading and ultimately still being in the minority, the CPM-CPI the party with the third highest seats but a totally opposite portfolio was mollycoddled for support from outside the corridors of power. A huge stock market crash occurred immediately showing the investors lack of confidence, but the govt handled it unbelieveably well.

It was always clear that Manmohan Singh would face an uphill battle. There were basically two big questions. The first, the not-that serious one was whether the Congress could manage an amicable division of powers between its leader Sonia Italian Gandhi, and the unelected technocrat Sardar in whose favour she renounced the top job. He was immediately in the charge of all policy, and in theory the government. She still was the unanimous leader the coalition, the United Progressive Alliance, and was to handle their politics.

This did not face any problem, as you wont expect Dr. Singh to have glitzy political intentions. even his mentor in Oxford (search google) called him somewhat an introvert and was pretty surprised to see him in a prime ministerial hot seat. In fact Singh was the perfect foil to Sonia and the relation was that of perfect bonhomie.

The second the more important question was whether, in managing this unweildy and disparate coalition, it could get much done. The coalition includes many who remain at best suspicious of reform. So inspite of being as finance minister in 1991, the architect of the liberalization and the deregulation of the economy, the policy which Manmohan is in charge of has been tailored to the need to find the consensus between the reformists and their opponents, people who are highly suspicious of any reform.

The result? Both are extremes and both feel let down. Reform is piecemeal and half hearted. You can neither remove caps and privatise, relax labour laws, nor can you fully promote of the grand public spending schemes pushed by the left.



The big disappointments

1. First and foremost to me the government has failed to produce the changes so badly needed if India is to catch up with China - Which was, is and looks set to become the favourite destination of foreign investors. China plans to build 25 mega cities by the decade, do you think we can even match anything of their economy if we dont start off now?

2. The little disappointments to me are just a number of modest improvements to the system of caps on investment which , ludicrous though this might seem for a country of India's position, prevent foreigners of commiting the heinous crime of putting as much money and know-how as they would like into our existing antiquated services and industries. Ha ha. Period.

3. Failure to garner support for the UNSC Permanent Seat. Thats a huge under effort on the part of the government. Rice came, was tomfoolered around, and she went, giving lumpsome F16s to the Pakistanis. The US is the only country mum on out UNSC prospects inspite of huge measures taken by them for trade, defence and strategic interests.


The power of the Reds !
Many ppl still think of the Communists to be a passive supporter just organising bandhs and protests and if you are not from WB or Kerala, you really dont need to see their faces.. Here is how they affect us..
1. This government will never be able to attack the huge subsidies paid out by the government to any number of interest groups.
2. It will never be able to tap labour market reform.
3. Here is an interesting scenario I read from the Economist , Ireland.

"India was horribly slow in cashing in on the ending of this years restrictions on the trade in textiles. Because any Indian company employing more than 100 people requires the permission of the state authorities to sack workers, few companies have dared expand to take advantage of the increased demand. More flexible China with a textiles tradition less glorious than India's has cleaned up at its expense."

4. They have hobbled Manmohan from the start by insisting on The "Common Minimum Program" for which ,I read "lowest common denominator". As a consequences the govt. has effectively excluded in advance most of the main reforms.


Here is what the Commies have recently done --

1. They have resisted most moves to privatise state enterprises or ease curbs on foreign investment.
E.g just some time back the CPM demanded the amendment of a law that will establish "special economic zones" SEZs modelled on those that helped China kickstart its modernisation 25 years ago. They forced the removal of a provision that would have given the state governments the right to exempt these zones from India's Restricitve labour laws.

2. Any liberalization reform generally can be done only through govt.. executive action, e.g such as raising the cap on foreign investment in telecommunications that was done. But the problem is that these are therefore measures that would require legislation, for other industries eg. insurance is simply impossible,



I feel to some extent in these issues our PM is to blame partly. Cos, he has failed to use the power of his office to fight for the reforms he believes in, and has been altogether too meek in twisting his allies' arms.


But, having said that its not all bad things for the Left. They also can harbor equal disgruntlement on non commitment to their good policies. If we remember, the Congress had marked its election campain with the common man. It showed that against the backdrop of a buoyant economy and booming IT industry, there was a huge cry of pain from the neglected country side where 70% of our people live, many of them in dire poverty. They had promised free electricity to farmers, and job security in the mills their ads.

Therefore also, much of the common minimum program the UPA adopted was a promise to tackle their plight. Now lets take a related example. There was a sure commitment in the CMP to the immediate enactment of the nation wide "Employee - guarantee" scheme which would offer casual labout to anybody willing to do it at the minimum wage.

Its supporters then had argued that this would make a huge onslaught on poverty, reduce migration to the towns, help improve the woeful infrastructure and foster a fairer social order. Its critics, who now include the members of the government, believe it would be a gigantic waste of public funds which would be siphoned off by corrupt officials paying ghost workers to build phantom projects. They know themselves too well dont they? :) But, Rather than scrap the scheme, or event try and implement it, the government has diluted it to the point of uselessness. Nothing has come out of it.



The Hoorays..
Well, Economic / Labour reform is not everything. And most of what foreign pundits prescribe to India is to my belief, just to suit their cause. For example, you may have one economist harping about all the goodies of globalization.. but they simply ignore the fact that not everything is conducive at all environment, the concept cant be plug and plays, cant be places to
suit the whims and fancies of the developed world, and might not always be the BEST way of doing things.


Some highlights I saw ---

1. Our private sector continues to perform well despite the many obstacles imposed on it by the government. Hooray for our IT sector.

2. A good image abroad. Manmohan is regarded as dignified, decent and incorruptible. Those qualities have paid dividends outside India , too. Mr. Singh's moderate style ( a great relief after the somewhat national hysterics of the Bharatiya Janta Party) has been of tremendous importance. Maybe esp. in repairing relations with Pakistan, there is some thing tangible coming out of the Kashmir issue. I think the mingling of the common man in J and K and POK was a very good thing. . Allowing the hurriyat to venture out and speak anything.. umm maybe yes

3. Tax reform. Yes. Gooood. Finally, India's first value added tax, which should widen the tax base and help improve the country's dismal finances. Hopefully its not the 5% service ppl that pay 90% of the tax anymore

4. Some small progress on investment caps, good for privatisation

But then all this Very less.. and small contributions from the government at that.. Merely serving to highlight how much else the government has failed to do in its first year



Okay so much for the report card... But then, what did it inherit?
a. A BOOMING ECONOMY , still growing at more than 6% a year.

b. A wave of goodwill thats followed Sonia Gandhi's act of "renunciation" and the appointment of Mr Singh a man of unquestioned integrity, decency and economic expertise.

c. A tattered opposition. In shambles. The BJP, was as shocked by its electoral defeat as congress was by its victory. But it has taken longer to recover. It has allowed itself to become pre occupied with internal bickering , and has resolved to boycotting parliament, which also led all seeing the first cracks in the esteemed BJP - TDP combine..



Here are some more Good decisions and good initiatives happenning I thought. :)
1. The "right to information" act passed . This shows our laws are maturing.
2. Investing in primary education and rural infrastructure.
3. Stemming the epedemic of AIDS, that outsiders believe is still out of control.
4. Handling the tsunami relief measures, handling the tragedy as a self sufficient, swift decision making and proud government.



Whats in the future? From the forebearer
The First 15 overs have been good steady beginning. Not the sehwag way, but maybe the wall is at the crease.. A solid platform has been built for the years to come. The government has identified the right priorities.

Yeah so it was kinda good.. but will it last?

? Are we brave? will it be the same econo-political environment the government has to face? If yes forget difficult radical decisions
? Blues from the Red lands.. If I remember the Aaj Tak lady some months back speaking about this issue, next year sees Assembly elections in West Bengal and Kerala, which will pit the Congress locally againsts the Commies it relies on so much at the center. That will make contentious desicions even harder.
? The "I want the next apple too" syndrome.. By 2007, the fat-pot-bellied congressite it will already have its eyes on the re-election which am sure will make the energies (read monies) channelized somewhere else.. and in general make the government timid.


The Congress officials anyways can boast of the skill with which they have handled coalition politics. Look at the way they have treated governors and governments in states like Goa and now Bihar. Just to suit their needs. Nothing but a sham. But atleast they have avoided doing anything very silly and kind of have established a reputation of competence. But far more is needed . A lots is at stake.


Nearly half of our children are malnourished

More than 6 million people are HIV positive.

We have covered just the initial ground for basic infrastructure , good health amenities.. better education. the list is endess..


So all the best , Manmohan , Chidambaram, Sonia .. Happy First Birthday to your CMP government. The next critical 4 years of a billion lives depend on you.