Manmohan returns to path of
reforms By Siddharth
Srivastava
NEW DELHI - Indian Prime
Minister Manmohan Singh, whose Congress-led United
Progressive Alliance (UPA) is under attack for
policy paralysis, has asserted himself by
announcing much-delayed economic reforms to boost
sagging national income growth rates. Big-ticket
items included changes in the aviation and
organized retail sectors to attract foreign direct
investment or FDI.
Earlier efforts to
introduce similar reforms were knocked back under
pressure from coalition partners, especially the
Trinamool Congress, led by West Bengal chief
minister Mamata Banerjee, who fears India's
unorganized retail segment, which employs
millions, will be hurt due
to the changes.
This time, Manmohan has
personally backed the reforms and is in no mood to
budge. Aware of a massive back lash from high
inspiration middle class in India, the UPA
government knows that it desperately needs to put
the economy back in shape. General elections are
due in India in 2014.
Opening multi-brand
retail reforms will allow international companies
such as Walmart and Tesco to set up shop in Indian
cities and establish back-end linkages that will
benefit farmers. Investments in infrastructure
such as storage and refrigeration facilities and
high-tech transportation will cut down on enormous
waste in farm produce. The consumer will also
benefit due to lower prices.
India's
loss-making airlines, meanwhile, are in dire need
of capital infusion, with at least one major
player Kingfisher Airlines, on the verge of
shutting down. A big increase in diesel prices
seeks to address the rising cost of fuel subsidies
and skewed consumption in power generation and in
the automotive sector.
Regional parties
such as the Samajwadi Party and the Bahujan Samaj
Party appear willing to prop up the numbers for
the Congress in parliament should the need arise.
These outfits are united in their deep dislike of
the main opposition, the Bharatiya Janata Party
(BJP), and would not like to offer it any early
opportunity to come back to power.
There
is no doubt that Manmohan will reap a fair amount
of personal dividend from the latest moves and
help him to re-establish his reformist
credentials, which have been undermined in this
his second tenure as prime minister.
In
the early 1990s, Manmohan as the then finance
minister initiated the economic liberalization
that unleashed high economic growth and unshackled
industry from what was referred as the "License
Permit Raj" due to overwhelming government
controls. In his first tenure as prime minister
from 2004-9, Manmohan pushed through the Indo-US
nuclear deal, which gave India access to overseas
nuclear technology, even threatening to resign in
the process.
However, doubts continue to
linger over the extent of the political dividend
that the Congress party, led by the all-powerful
Sonia Gandhi, will derive from the economic
changes. The UPA government cannot escape from
charges of massive corruption, crony capitalism
and losses to the exchequer due to scams such as
one involving the underpriced sale of telecom
spectrum and allocation of coal-mining blocks.
Still, parties opposed to the Congress are
also in disarray, and there is evidence to suggest
that windfall gains from telecom license sales
benefited the BJP when it was in power under Prime
Minister Atal Behari Vajpayee. The BJP also
continues to be a house divided, with several
leaders such as Narender Modi, Sushma Swaraj and
Arun Jaitley fancying their chances to be future
prime ministers.
There is also the overall
suspicion about BJP's Hindutva agenda, which is
seeped in the ideology of majority Hindu rule.
Modi's stature, despite a clean image and good
development record as chief minister of Gujarat,
has been dented a bit by recent court judgments
that have indicted top BJP functionaries for
orchestrating attacks on Muslims in 2002.
A Third Front without the Congress or the
BJP is a possibility, though past experiments have
collapsed under the weight of individual egos and
ambitions. Quite a few of the regional satraps
such as Mulayam Singh Yadav, Mamata Banerjee,
Mayawati, Jayalalitha are known to be whimsical
and unpredictable.
Indeed, it is difficult
to predict India's political landscape two years
from now. With Gandhi party scion Rahul Gandhi yet
to find his political bearings, the Congress could
stick to Manmohan, 79, as its prime ministerial
candidate, given his incorruptible and redeemed
reformist stature, should he remain healthy.
Manmohan has been accused of being weak,
an underachiever and looking away as his party men
or ministers belonging to coalition partners such
as the DMK indulged in organized loot.
However, there is not a hint that Manmohan
could have gained personally from these scams.
This is unlike the Bofors scandal in the 80s
wherein it was strongly suspected that the Gandhi
family benefited when Rajiv Gandhi was prime
minister of India. The Congress was voted out of
power.
Maybe, the BJP could spring
octogenarian LK Advani, supremely fit for his age,
against Manmohan. That would set up an interesting
contest in the world's largest democracy where
majority of the population is under 35 years of
age.
Siddharth Srivastava is a
New Delhi-based journalist. He can be reached
at sidsri@yahoo.com)
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