Race Course Road/The Sunday Standard/ April 03, 2011

Garibi hatao clouds gather before reshuffle

While Congress leaders are busy with the elections, Prime Minister Manmohan Singh and Congress president Sonia Gandhi are busy reading up dossiers on those likely to be promoted or be inducted as new ministers in the Cabinet reshuffle next month. Worried partymen have made it clear to both Sonia and Rahul that the Family must intervene to revive the party’s fortunes by refashioning the face of the government. None favour a change of Prime Minister yet, but all those seeking an ideological shift in the look and feel of the government are firm that the coterie around the Singh be dismantled — those loyal to the party ideology should be made part of the new Cabinet instead of the ones who seek endorsement from America or India Inc. After the scams, UPA II is perceived as a pro-business government. Congressmen say the reason why they lost the 1996 elections — Manmohan was the Finance Minister then — was that the party was seen as pro-rich. Hence, the new mantra is that the Congress should be projected as a political party that approaches “from the centre and one that leads from the right to the centre,” and that the Cabinet should have faces with a Leftist complexion. Only the next Cabinet reshuffle will tell.

All The PM’s Corporate Cassandras

Is an insecure government dimming the India story? This was the fear of the nattily attired group of more than 20 business and banking honchos who met Prime Minister Manmohan Singh at his residence last week for the first-ever meeting meant to lay out a roadmap for inclusive growth. For Manmohan, it was an opportunity to engage the corporate world in bringing his economic agenda back on the table. The power list of India Inc. — Ratan Tata, Jamshed Godrej, Rahul Bajaj, Pawan Munjal, Azim Premji, Sunil Mittal, Deepak Parekh, Ashok Ganguly, Kiran Mazumdar-Shaw and Chanda Kochar — patiently heard each other out. Some even made PowerPoint presentations. All used the opportunity to obliquely inform the PM that the current environment of fear and favour has put them all under pressure and is inhibiting their potential. The irrepressible Rahul Bajaj said an impression that the country was slipping back into the pre-1991 controlled economy was gaining ground. Young Kumar Mangalam Birla read out a well-written intervention on India being hamstrung by economic inaction on reforms. Both banker Deepak Parekh and telecom czar Sunil Mittal spoke about the disastrous impact of indecision on FDI policy on retail and how the suspense over the new telecom policy after the 2G scam is detrimental to the sector. Parekh said he has discovered that India isn’t popular with investors any more. The message to Manmohan was clear — punish the criminals but don’t penalise the clean. For Manmohan — once India Inc’s darling — it was a shocker coming from members of his own Council on Industry and Trade.

CVC Haunted By Thomas Effect

After the P J Thomas fiasco, the government is in no hurry to appoint a new Chief Vigilance Commissioner (CVC). For the first time since 1964, India has been without a CVC. It’s been six weeks already, and the selection process for a new CVC hasn’t even started. With Prime Minister Manmohan Singh, Congress president Sonia Gandhi and Home Minister P Chidambaram — on the election trail, South Block mandarins are waiting for instructions, leaving the two Vigilance Commissioners, R Sri Kumar and J M Garg, to hold fort. Even the secretary to the CVC, K S Ramasubban, has retired. With minister of state for personnel V Narayanswamy in Puducherry for elections, the Department of Personnel & Training (DoPT) is sitting on all files. The real reason behind the delay, however, may be the government’s confusion over implementing a Supreme Court ruling, making it mandatory for candidates from outside the All India Services to be considered for the CVC’s post—so far the position has been an IAS bastion. Usually, a top babu is given the plum post in recognition of services rendered to the ruling party, both in the states and at the Centre. The bureaucracy, insecure at the thought of an outsider monitoring their conduct, is strongly opposed to the court’s ruling. The political leadership has fallen in line with the IAS. Insiders say the PMO is agreeable to letting the DoPT invite suggestions and applications and shortlist suitable candidates to be interviewed by the three-member panel headed by the Prime Minister with the Home Minister and the Leader of the Opposition in the Lok Sabha as members. The final word is not out, but the nation may get its first woman CVC.

Chidambaram’s Certificate Course

It was a choice Hobson could’ve dreamt up: excessive security or incredible India? Recently, the Home Minister P Chidambaram gracefully accepted that attracting tourists is as important as securing India. Succumbing to mounting pressure from the newly appointed Tourism Minister Subodh Kant Sahai, the home ministry unobtrusively withdrew its earlier communications to Indian missions abroad which made it mandatory for all seeking a visa to submit birth certificates. The ministry issued this order in the wake of the David Coleman Headley revelations. The comminique had drawn flak from Indians who are foreign citizens but who don’t possess a birth certificate. Many US citizens found it a bothersome procedure. Finally Chidambaram yielded, but not before instructing Indian missions to ensure proper verification is done before granting a visa.

Beg, borrow and spiel

As an agile 76-year old Union finance minister rose to present his third consecutive budget in Parliament on Monday morning, his party, the markets, India Inc and the Opposition were all expecting tall promises from the 5 ft 2 inches Pranab Mukherjee, including drastic changes in structural and ideological directions. After all, in 1982, Pranab at 47 was the youngest ever finance minister to present a full fledged budget; Indira Gandhi complimented him for being the shortest finance minister to give the biggest ideas. His predecessors like P Chidambaram and Yashwant Sinha are known for offering innovative ideas laced with market-friendly jargon. They presented Dream and Super Budgets. However, Pranabda’s budget reflects neither dream nor direction. After making the longest ever speech made by a finance minister — 13,889 words for over two hours — Pranab left no one in doubt that he wasn’t a liberal parent who intends to leave behind gigantic, productive assets and huge savings for his successors or inheritors to walk laughing all the way to the bank. His budget is very small on big ideas and very big on small ideas.

The finance minister has made it very clear that at the sunset stage in his political life, he isn’t ready to take risks or make compromises with his brand of politics. In deference to the wishes of his command, Pranab decided to indulge in a spending spree but refused to raise money by imposing extra burdens on anyone. He has treated both a labourer who gets Rs 120 per day through the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) and a corporate caliph who earns a dividend of Rs 12 lakh per day on the same footing; he hasn’t disturbed the take-home-income of either. But he had to face the problem of raising money to meet rising expenditure on various social schemes. So, Pranabda decided to follow an old saying: “Increase expenses, income will automatically come from somewhere.” For the finance minister his budget was meant to provide freebies to the election bound states of Assam, West Bengal, Tamil Nadu and Kerala. All the four states have been given special elections as the Congress expects to win two from the Marxists and retain the other two at any cost.

Prime Minister Manmohan Singh who once worked under Pranab as finance minister may have changed his views on the economics of politics. Pranabda’s politics of economics is consistent and hasn’t changed much. Budget 2011 reflects his core ideology — a Budget by the Congress, of the Congress and for the Congress — let’s borrow more to spend more. The finance minister simply refused to earn more.

During the past six years of the UPA government national debt has risen by over 100 per cent from Rs 2 lakh-crore in 2004 to over Rs 4 lakh-crore today. For a population of over 1.1 billion, this means a debt of over Rs 32,000 per Indian. The government paid Rs 2.13 lakh as interest during 2009-2010 and will end up forking out around Rs 2.67 lakh-crore during the next fiscal year. If money was being borrowed to create tangible productive assets and generate employment, the nation would have forgiven the finance minister for leading the country towards bankruptcy. Even government statistics foretell a doom story. While the number of those living below the poverty line has gone up, the number of those looking for gainful employment is rising at a rate faster than the country’s population growth. If the UPA continues to practise its current philosophy of profligacy, it will leave behind a non-productive and poor Bharat inhabited by a few hundred wealthy Indians who eventually own India.

While Pranabda is not willing to withdraw the subsidy on foodgrains, kerosene and diesel to retain his socialist image he has bitten the pro-rich bullet of phasing it out. In a move that will hit the middle class hard, the finance minister has declared that BPL families would be given a cash subsidy on kerosene oil etc, from 2012; which means the middle class will end up picking up the tab for their cooking gas and other subsidised products. It is puzzling that the finance minister found it socially correct to forego customs revenue of Rs 615 crore from the import of dairy products and another Rs 285 crore from importing footwear for the rich and mighty. But such figures seem tiny when the budget justifies over `4 lakh-crore as revenue foregone by granting both direct and indirect taxes to the corporate sector. In fact, a detailed scrutiny of Budget 2011 reveals that Pranabda was persuaded not to increase the tax burden of those sectors that are accused of absorbing and generating the maximum black money. Actual tax incidence on property developers is just 19 per cent, on builders 22 per cent, diamond cutting 20 per cent and on realty agents 20.3 per cent as against 30.5 per cent for poor retailers.

When trade unions raise a hue and cry to take PF interest rates north, corporate-sponsored reformers scream foul. They forget that the total interest payment on PF and other small savings is only Rs 20,000 crore as against Rs 2 lakh-crore which the government gives as interest on market borrowing. Check this out: Indian billionaires whose net worth is over Rs 222 billion will pay the princely sum of Rs 603 crore as wealth tax and zero capital gains tax.

Pranabda has also avoided cutting costs and reducing the size of the government. His three budgets have added over two dozen committees, commissions and panels; most of their members enjoy either Cabinet minister or minister of state status, or at least that of a secretary to the Union government. There are more people holding ministerial rank outside the government than within. Obviously Pranab’s mission and motto is to retain jobs for me-and-mine and distribute dole to those who help him to stay in power. No wonder our erudite finance minister spared only politicians and bureaucrats for providing ‘essential services’ while imposing service tax even on hospitals in which heart surgery is carried out in air-conditioned operation theatres. mailto:prabhuchawla@expressbuzz.com

Power & Politics/ February 23, 2011/The New Indian Express

BJP’s menacing vacuum

Despite the media hype the BJP is certainly passing through one of the worst phases in its life, something similar to years after 1984 elections when it was reduced to two members in the Lok Sabha. But the present spell has serious political consequences for its future politics. In the 1980s, it still had hope for the future and a leadership in firm command. But now it is darker, regardless of the temporary respite, like a few recent by-election victories, and of the ruling UPA finally buckling under political pressure, and constitutional obligation, to a Joint Parliamentary Committee probe into the 2G Spectrum allocation scam. These short-lived gains are overshadowed by its strategic failure to locate and cultivate political allies at a time when the Congress is almost paralysed by indecision.

L K Advani, the oldest of the party’s leaders and by far the most experienced, at 84, certainly does not inspire confidence as the prime minister-in-waiting. Worse still, he seems oblivious of the fact that the role in which he has been cast is to provide an alternative to the Congress and its leaders, not to play to them the nice-guy-next-door, or even fawn on them in public. Advani is the leader who created Gen-Next. He is the person who made the BJP acceptable to many regional parties by bringing them under the NDA. Advani could have seized this opportunity and been the architect of designing a new coalition and been the new Jayaprakash Narayan.

But now, so ecstatic he’s been as the Congress’ ‘soft enemy’— psychoanalysts might discover meanings to it — that he runs to Congress president Sonia Gandhi’s house to invite her to the function for his book release. His chivalrous spirit would also prompt him to invite her son, Congress general secretary Rahul Gandhi, to his office for a cup of tea. When it involves Sonia, so prone is Advani’s heart to melt that he recently publicly regretted to her when a team of experts close to the party, comprising, among others, former IB chief Ajit Doval and S Gurumurthy, a crusading political analyst with a right mind, suggested that the Gandhis might be among the Indian nationals holding illegal accounts abroad. Sonia offered no proof of innocence, yet Advani blushed as though he’d made blasphemy.

Thanks to Advani’s magnanimity, the party with a difference has become a party of deference. And that too in the most favourable hour for it, when the Congress-led UPA has turned into a house of scams. Prime Minister Manmohan Singh, universally respected till recently as a man of integrity, now does more hand-wringing for corruption in his government than the model in the Surf commercial. The UPA itself is a house in disarray, its constituents haunted by doubt and suspicion of none other than the Congress. The NCP, one of its partners, thinks the CBI inquiry into the 2G scam is cleverly targeted on its chief Sharad Pawar. The inquiry itself is getting more bizarre by the day — with the prime minister admitting that he knew about the wrongdoings all these years yet he kept quiet, and is swearing by the coalition ‘dharma’, while Kanimozhi, daughter of his flighty coalition partner M Karunanidhi, is facing police interrogation. It is more a madhouse than a coalition.

But the BJP has no alternative to offer. Advani could have seized this opportunity. His personal integrity in unquestioned. But his party is a ship without captain. Advani is totally indifferent to the restive constituents of the UPA and presents a picture of resignation. It is years now since he has lost close contacts with Pawar, Karunanidhi and Trinamool Congress chief Mamata Banerjee. Neither has he got time on his hand to spare on existing but largely self-supporting NDA partners — like Janata Dal(United), Shiromani Akali Dal led by Parkash Singh Badal, the TRS of Chandrashekhara Rao, the INLD of O P Chauthala, or Rashtriya Lok Dal of Ajit Singh — nor is he ready to explore new opportunities of alliance with the DMK, the AIADMK, Naveen Patnaik’s BJD, or even the CPI(M).

The party’s initiative began disappearing with the tragic demise of Pramod Mahajan, a Vajpayee acolyte, who was by far the best equipped to forge an alliance in the new era. With the years, Advani’s political judgment became woolly. Murali Manohar Joshi became indifferent largely because he thought his career in politics had peaked. Jaswant Singh and Yashwant Sinha, two other senior leaders commanding the political class’ respect, were not much partymen themselves. The leadership vacuum is now being filled by its two young olds, Arun Jaitley and Sushma Swaraj, both spirited debaters who are more in demand in television channels and business forums than in the company of ordinary people. Yet that’s where a good politician can gather the most valuable experiences of his trade. And, being in command of the headquarters, the microphone-loving types always stay ahead in the political turf battle of some of the party’s capable chief ministers — like Raman Singh of Chhattisgarh, Shivraj Singh Chauhan of Madhya Pradesh or Prem Kumar Dhumal of Himachal Pradesh.

With Narendra Modi, Gujarat chief minister and author of a governance model considered unparalleled by all, it is a problem of a different kind. While he is best equipped to lead the party into a new cycle of triumph and glory, he is hobbled by his past. A legal war of vendetta unleashed against him by the Congress at the Centre, and persistent campaign by an articulate segment of the civil society having strong ties with the Congress and a section of the secular BJP, has made Modi synonymous with the 2002 riots.

It is a trap from which one doubts if he can ever disentangle himself. But that has made the BJP’s leadership vacuum even more menacing. There is nobody with authority and competence left at the top who can weave a consensus across the country to challenge the Congress at the Centre. But the opportunities are so enormous!

In Tamil Nadu, where politics is divided between the DMK and the AIADMK, both having partnered the BJP in the past, there is headroom for choice. Between the two, the DMK is, to borrow a phrase from former US defence secretary Donald Rumsfeld, the “known unknown”; it will invariably judge its ministerial prospects in Delhi in terms of how lucrative they are. On the other hand, J Jayalalithaa, the AIADMK supremo, is decidedly the “unknown unknown” whose approach to coalition is certainly not that of an auctioneer, though it is unpredictable.

In Uttar Pradesh, what the BSP leader and Chief Minister Mayawati, who is decidedly the mega-state’s most powerful politician, needs most is a friendly government at the Centre. That not only removes the worries regarding corruption inquiries dogging her but sets the stage for the state’s much-needed modernisation. The Congress refuses to cooperate with her for reasons related purely to the Gandhi family’s ambition. It wants Uttar Pradesh to be Rahul’s “playing-fields of Eton” from where he would win the “battle of Waterloo”.

Like either of the DMK/AIADMK duo, or Mayawati, the CPI(M) too is a potential ally of the BJP, especially after it gets the knock-out blows in the Assembly elections in Kerala and West Bengal this year. But the two-party system works in Kerala, and so the CPI(M) will retain a good part of its following there. And in Bengal, the dizzy height of Mamata’s present popularity may shrink once she takes charge of the state government. And that may compel the CPI(M) to reboot itself and see the BJP without ideologically tinted glasses. And the issue of rebuilding bridges is still wide open with Naveen Patnaik of the BJD.

Rather than being drawing board exercises, much of these calculations could be a reality now if only the BJP had a leader commanding others’ trust. With the party still in the shadow of a self promoting leadership who’d rather impress drawing room crowd and corporate honchos rather than its own men and women, and represented in public by two relentless television orators, even the bravest would shun it as a potential coalition partner. The BJP now needs a leader who can lead others and not led. If the Congress has betrayed its voters, the BJP has let down its own core followers by losing its identity. For it, negativism has become its only virtue and ideological conviction its bankruptcy. prabhuchawla@expressbuzz.com

Power & Politics / The New Indian Express/ February 16, 2011

UPA’s Confidence Deficit Raj

Prime Minister Manmohan Singh should be thanked for deciding to speak to the nation today through TV journalists. It is important to hear from him his take on governance. We were hearing about it earlier from assorted busybodies. Like Union home minister Palaniappan Chidambaram who, in a recent interview to an American daily, sought to deflect the charge that the UPA-2 government was showing “governance deficit.” The clever lawyer that he is, he said that there could be an “ethical deficit” instead. Significantly, the newspaper on whose columns Chidambaram did this philosophical quibbling ran an article a few weeks later in which some spirited speculation was made that he was indeed waiting in the wings, and that too much ahead of others, to replace Manmohan Singh as prime minister — at the end of UPA-2’s term in 2014. That adds weight to his comment.

However, it is hard to digest the hint that if only Manmohan Singh could curb the “ethical deficit”, shorthand for the scams, the government, in which Chidambaram could have made the difference, would have got itself covered in glory. That’s a blinkered view, at best.

Scams do not erupt suddenly unless there is a general lack of direction. And fecklessness. That’s what plagues the UPA-2. In a nation with more than half the population under 25 years, the 34-strong Cabinet (excluding Cabinet-status holders Montek Singh Ahluwallia and Nandan Nilekani and other corporate paratroopers) has only three under-50 members: Kumari Selja (48), Dayanidhi Maran (44), and G K Vasan (46). And it is more like a Soviet politburo than the Cabinet of a democratic coalition. Its members are wheeled in and out of departments as if at the command of some invisible “Great Helmsman.” Nobody knows why Kapil Sibal, who acted for a few months like having the most original ideas after Lord Macaulay on education in India, was suddenly moved to the chair made vacant by the exit of controversial A Raja, at telecom, arguably one of India’s most rogue-infested ministries. If Kamal Nath had to leave the roads ministry due to non-performance, how will he benefit his new home, the urban development ministry, whose job is to save the country’s creaking cities? If Praful Patel got himself labelled in the civil aviation ministry as “minister for Private Airways” how will his successor Vyalar Ravi, a typical statist given to central planning model, who has already earned the sobriquet “minister for Air India,” do any better? If Murli Deora hobnobbed with the Big Oil as petroleum minister, will he not walk through another corporate door as corporate affairs minister? Besides, Jaipal Reddy, who is known to love nothing more than the microphone, may not be the ideal leader of the petroleum ministry, which calls for tightrope walking between consumer interest and that of producers.

A Cabinet superimposed on the government cannot but be muddleheaded. It is unable to explain the current inflation, which food economist Ashok Gulati has described as the “worst form of taxation on the poorest of the poor.” But Chidambaram is unfazed. “Any serious student of economics would say that, for the most part, this (high inflation) is demand driven”, he has said in the interview. He was echoing what the prime minister recently told the state chief secretaries, that food prices are soaring because Indians are eating more.

The argument is specious because the government itself released data in 2009 showing 37 per cent of the people below poverty line. The calculation was obviously a joke, as the Planning Commission had calculated the poverty rate only two years earlier at 27.4 per cent.

But the 2009 figure was justified on the ground that its basis was different, or, in other words, the poverty line had been redrawn. A bit of dithering on the poverty number may be explained as a smokescreen to justify a bunch of hopelessly inefficient welfare programmes, including the unaudited MGNREGA. It was of the more-leftist UPA-1 vintage. But now the UPA leaders are no longer on the same page. The welfare programmes, they are saying, have already made Indians rich. In UPA’s India, things really happen fast. In the process, however, about 10 per cent of the population — some 120 million people representing the gap between the 2007 and 2009 poverty counts — are missing.

The government is missing the plot even on its big-ticket welfare projects. Take for example the one to universalise primary education, begun by Atal Bihari Vajpayee as Sarva Shiksha Abhiyan, on which the UPA government has applied a new coat of paint and enacted a new law giving Right to Education (RTE) to all children between 6 and 14 years of age. It has no doubt raised enrolment, but that’s where the story ends. NGO surveys show that over 60 per cent of the students are incapable of simple divisions and over a half of the 10-year-olds could not read to the ability expected of six-year-olds. Primary dropout rate at 40 per cent is higher than Bangladesh, a country poorer than India. The pity is, of those students who enrol themselves in secondary schools, as many as 48 per cent drop out during the journey from the ninth standard to twelfth. It shows how unattainable is the promised “right” to education.

That brings us to UPA’s another shining project, the Right to Food Bill. The new buzz is to do away with the corruption-ridden Public Distribution System and issue food stamps, much like it was done in Europe ravaged by the Second World War. That enables the coupon holder to buy his quota of food from the market at subsidised price, with the trader free to cash out the coupon later. It will no doubt let the food security system reach every deserving citizen, which is not the case with the ration shops now. But is Indian agriculture equipped to meet the consequent spike in demand? Not quite. On an index of 100 in 1993-94, agricultural production in India has gone up to only 119.2 in 2009-10. If population was identically indexed, it would probably have reached 135. That’s a rough measure of rising starvation. Instead of planning a second Green Revolution, the government is writing a new law. Agriculture minister Sharad Pawar has remained too busy with management of cricket all the while to give it a thought.

And so every minister has some preoccupation other than the drab job of governance. Railway minister Mamata Banerjee has the task ordained probably by the goddess next to her house in Kolkata’s Kalighat to rout the CPI(M) in the next Assembly poll. What does it matter to her if the railways budget suddenly goes in the red? And why should Union finance minister Pranab Mukherjee, who enjoys being adored in his Congress party for his Confucian wisdom, be hassled by the rising prices? He has on his hand the more important task of giving his son a Congress ticket for the West Bengal Assembly poll.

The real deficit that is afflicting the government is of direction. It is a government on drift. The ‘1991 reformers’ — Manmohan Singh, Montek Singh Ahluwallia, Pranabda — are tired but not retired. It may have so far escaped the notice of voters, but the stock market is unforgiving. It is struggling to claw upward from where it was on the last day of 2009, after losing a fifth of its value in the past five weeks. Isn’t it confidence deficit, Mr Chidambaram?

prabhuchawla@expressbuzz.com

Power & Politics / February 09, 2011/ The New Indian Express

The tragic story of Mr Clean

In 1992, when George Bush Sr thought he’d whizz past the Democrats in the race for the White House thanks to the patriotic vote after the first Gulf War, Bill Clinton checkmated him with the slogan, “It’s the economy, stupid.” In 2011, the table has turned on India’s ‘Singh Parivar’— Prime Minister Dr Manmohan Singh and his Sancho Panza, deputy chairman of Planning Commission Montek Singh Ahluwallia — who have for the past two decades managed to grab the pulpit of India’s best economic brains. While India’s economic advance under their stewardship is rather debatable, with India poorer now than in 1991 when they entered the cockpit, what is beyond doubt is Singh and Co’s yawning disconnect with politics.

In 2004, UPA Chairperson Sonia Gandhi looked relieved handing over charge of UPA-I to Manmohan Singh, whose clean image shone like a talisman on the disreputable, geriatric Congress party. After a mere gap of seven years, the party is buried under an avalanche of scams and the Opposition’s fingers are pointed, unfortunately, at none but Manmohan Singh for his alleged acts of omission. Now, those of commission, too. As prime minister, he was expected to lead from the front. Those who have hardly any stake either in India or the Congress are now leading him from behind.

As the Congress party gets pummelled in the media, young Turks are getting restive; their whispers that Manmohan is a liability are getting louder as the old guards continue to assert he is an asset — the obvious reason being, perhaps, that the average age of the UPA-II Cabinet is the highest since Independence.

It’s tragic that someone responsible for creating a “New India’ is losing both credibility and acceptability. Integrity and tolerance were Manmohan’s USPs. Both are evaporating fast. If there was a sandbag — A Raja — for the 2G Spectrum scam, in the S-band spectrum allotment controversy the punches are landing straight on the prime minister’s face. S-band is a special frequency that is scarce and therefore priced high.

It seems Antrix, a subsidiary of the ISRO — which is directly under the prime minister — got into a sweetheart deal with Devas Multimedia, a company owned by a former ISRO scientist for 70 MHz of the S-band spectrum. Now the CAG estimates that if the realised price in the recent auction of 3G Spectrum —`67,719 crore for a mere 15 MHz of frequency — is applied to the S-band that ISRO made a charity of, it would have been Rs 2 lakh-crore; tens of thousand crore rupees more than the 2G Spectrum loot. Together, the total suspected loss to the exchequer is 64.34 per cent of India’s government revenue in 2010-11. Both the BJP and the Left parties have found an excuse heftier than 2G spectrum scam to perhaps, hinder the smooth passage of the 2011-12 budget.

But it is a mystery how Manmohan Singh, reportedly a man with a mission and a leader with clear vision, has become just another average politician struggling to survive in office. Look at the firsts to his credit! He is the first non-Gandhi-family Congress politician to be re-elected to lead the Cabinet twice. He was hailed as the most qualified man to head the government, though it’s not a reflection on the creative repertoire of Jawaharlal Nehru. Now Manmohan seems to have lost all sense of purpose and direction. Last year he made half a dozen forecasts of prices coming down within definite timelines, all of which were proved wrong. In desperation, perhaps, he made a hash of the basic economics he learnt in Amritsar many decades ago by suggesting that the current price rise is due to rising food consumption under his super-efficient rule. It was a harsh joke on the poor to whom none of the government’s expensive welfare programmes — including the Mahatma Gandhi NREGA — had reached, thanks to a kleptocratic government and thuggish middlemen. When pushed to the wall for an inflation remedy, Manmohan replies from behind a sage-like aloofness that he is no astrologer, nor has he a magic wand.

Nobody is blaming him for the rise in the prices of volatile items like oil (what can he do if Egypt begins to boil, driving up the price of Brent crude?). But the headline inflation rate is an aggregate, also underpinned by a core inflation rate of non-food manufactured items, which too ran high at 5.3 per cent in last December. To achieve a headline inflation rate of 5 to 6 per cent, the core inflation rate must not exceed 3 to 4 per cent. Without alternately blaming Sharad Pawar and late winter rains, can the prime minister take a second look at his own policy and seek answers to nagging questions like why reforms are stuck at the 2004 level?

Why are the fingers of a government that earns only $129.8 billion in revenue so itchy that it splurges $214.6 billion? If India under Manmohan Singh is such a wonderful story that the Government must spend crores of rupees to tell it at Davos, why did it receive only $131.1 billion in FDI: 23rd among all countries? Why is India rated 134th among 168 countries in terms of the ‘ease of doing business?’ All these factors relate to India’s supply constraints leading to high inflation. The demand side explanation that the prime minister is offering —“Indians are eating more”— only suits his convenience. Thirty-seven per cent of Indians live below the poverty line. If they are eating “cake” instead of “bread” they should be somersaulting overnight above the poverty line.

Manmohan has always been circumspect on corruption, his clean image being his passport to South Block in 2004. Of late, however, he has been making his musings on the subject heard through chosen oracles like Montek and others drafted from the corporate sector into the government. They declare that the state has a right to distribute the country’s resources, including wireless spectrum, any which way it liked: through auctions to raise funds; or by the first-come-first-served route if the purpose is to enlarge the market. Montek aired this view first in a television interview on the CAG calculation that the free distribution of 2G frequency has cost the state Rs 176,000 crore. The CAG was wrong, he said, as the purpose of the spectrum distribution was not to enrich the state’s coffers. I have no doubt that the Manmohan Singh administration will spin the same yarn; of the state enjoying the right to throw away spectrum to defend itself on the Rs 200,000-crore ISRO S-band scam. It is a poor defence as it creates room for crony capitalism, as the “first-to-come” may also be the largest bribe givers to politicians.

The prime minister has failed to make the state look above suspicion as an auctioneer — be it of natural gas, coal mines, wireless frequency, land to build houses for war widows or even of the right to sponsor events in an international games. Nothing seems to go well in Manmohan Singh’s hands — not even appointing the CVC, whose job is to clean the Augean stables. The time has come for the prime minister to either assert his authority or suffer a massive erosion of both image and credibility. It is not difficult to see whom Sonia Gandhi meant when she lamented that there was no retirement age for politicians.

Power & Politics / The New Indian Express/February 02, 2011

Incredible India at Davos

I wrote this article in a hotel room in Kolkata, after spending most of the evening in my car which was threading its way through an impregnable wall of pedestrians. After an hour wasted, and an appointment about to be cancelled, I was told that it’s the “Book Fair” that was holding up traffic.
I found it hard to believe, as there were only a few who came out of the fair ground with anything resembling a bag of books. “What are they really doing?” I asked the driver in exasperation. Equally bored, he replied in one word, “Adda.” It’s a talking shop where nothing is traded and nobody loses or gains.

It fits like glove a city like Kolkata, where orators have always outnumbered achievers. What defies logic, though, is why at India’s premier chamber of commerce CII, nobody is talking shop; why half the space of a restaurant in Davos during the 41st annual meeting of the World Economic Forum last week was hired for the duration of the entire conference and named “India Adda”. If the naming of the place was poorly conceived, so was the high-voltage Indian presence — a battery of heavy hitters including ministers P Chidambaram, Anand Sharma, Kamal Nath and Praful Patel, besides Planning Commission deputy chairman Montek Singh Ahluwalia and unique identity card project chief Nandan Nilekani: all at a state spend of Rs 25 crore. Equally impressive was the line-up of corporate bigwigs, from Mukesh Ambani and Sunil Mittal to Chanda Kochhar and Kiran Mazumdar Shaw. The Indian delegation was 130-strong, or 10 percent of all delegates present. “India Inclusive: Consolidation Phase,” read the clever line on the festoon. “India For A Billion Reasons” is the pert title of a coffee table book published by the Union government, with 1,500 copies distributed at Davos.

However, the ‘event managers’ of the India show were late by three years as nobody in the famous Alpine ski resort today has the patience to hear the old “India Story” that drew applause till 2008 — to the strains of Bollywood music in Zurich — and the line “India Everywhere.” In retrospect, the Indian extravaganza at Davos seems as pretentious as the throng of Kolkata’s dubious book lovers. By 2009, attendance began falling in India-related events at Davos. In that year not even 20 guests attended an Indian IT czar’s evening session. India in 2011 is a disaster story, with Foreign Direct Investment (FDI) contracting by a stunning 31 per cent in a single year — from $34.6 billion in 2009 to $23.7 billion. On the other hand, FDI to Singapore, a country one-fifth the size of the National Capital Region of Delhi, has grown by 122 per cent in 2010—an astounding $37 billion. What is rising is the flight of Indian-owned capital from India: estimated an astonishing $75 billion in the first decade of the millennium, according to a Columbia University study. Against this backdrop, the question that needs to be asked is: Why must the government spend millions of tax rupees to fly its flag at the Alpine jamboree? What object do the evening parties at Davos serve, attended by the same people who usually meet in Mumbai and Delhi for the same purpose — whining and dining.

When put in the China-context, the India story looks even grimmer. The dragon slalomed past the tiger in Davos 2011. China did not have to announce its presence from a restaurant corner, offering samosas as fondue; its aura was felt everywhere. The China-focused sessions spoke more about what China could do for the world than about itself, or its potential. There was no China hoarding visible anywhere. Their delegates numbered just over 20. But hardly a session went without a Chinese face on the podium, or a deferential mention of the country in the proceedings. It was ironic when Min Zhu, a Chinese special adviser to the IMF, not only stole the show in a discussion on India — addressed among others by Chidambaram and ICICI Bank chief Kochhar — but also advised Indians quite magisterially on how serious they ought to get on the inflation problem.

Inflation was the thorn in India’s side when the delegates met others privately or interacted with the media. With 25 basis points hike in RBI’s interest rate in response to spiralling inflation — the seventh in the financial year — there wasn’t much wall left for the Indians to be pushed back to. In view of rising prices, will India welcome FDI in multi-product retailing? As this obvious question came up, commerce minister Anand Sharma’s laboured reply — that intending MNCs (read Wal Mart) must have the back office infrastructure (read cold chain, etc) — revealed basic political instinct which his colleagues sadly seemed lacking. They made false promises that legislative changes were on the cards to make agricultural markets middlemen-free. Only those with little stake in electoral politics can say this.

There were plenty more reasons for India to keep a muted profile at Davos 2011. The country has just clocked a current account deficit of $15.8 billion in July-September 2010 — a bewildering 72 per cent increase on the previous year’s $7.26 billion. Current deficit being the difference between export and import without counting capital flows, its sudden expansion shows a lower growth in services receipt, despite a reported global recovery in the ICE (Information, Communication, Entertainment) sector. It is expected to further widen, if crude price pierces the $100-a-barrel ceiling. Why is India lagging behind in the ICE sector? No one had a clear explanation. Infosys CEO Kris Gopalakrishnan tamely said that Europe’s debt crisis was the culprit, and so was domestic inflation which was pushing up wage expectations. While Bangalore trotted out excuses, Silicon Valley strutted about confidently. On other occasions, the corporate picnickers from India, a cheery band of revellers, never missed an opportunity to lambast their country on the Swiss soil, where much of nearly $700 billion of Indians’ graft wealth is reportedly parked. Rahul Bajaj, India Inc’s oldest Davos hand, sagely remarked that black money was a “factual thing” and that the public would “like to know the details” of government investigation into it. Anand Mahindra, the Scorpio King, eager perhaps, to display his familiarity with films, announced that one doesn’t need “an Inspector Clouseau to bring back all the black money,”— all these wisecracks reeled off in a hurry before catching the ski lift.

Looking back, it seems India’s public image planners — be it global or national — are grappling with a problem of perception. Poverty is an integral part of the Indian reality; one successive regimes have tried to wish away. In 2004, the BJP, in a suicidal moment coined the phrase “India Shining” and is still paying for it. “India Inclusive” is closer to reality, though a self-reminder and not a catch-line. Twenty-seven per cent of India’s 1.2 billion citizens are below the poverty line, or 322 million Indians. This number was about the same in 1991. Chidambaram sounded unconvincing when he told a conclave that the poverty alleviation programmes of the UPA government were reaching out to all the poor, “except maybe the last 100 million.” Well, that’s quite a lot more than the population of, say, Germany.

I wish to conclude with a word on Montek Singh Ahluwalia who is a brilliant economist in theory but is increasingly exposing his disconnect with the political process. A few weeks ago, he came up with some abstruse theoretical defence of the infamous 2G Spectrum allocation and condescendingly referred to the CAG — a constitutional functionary — as the “gentleman” who perhaps got his sums wrong. At Davos, he was rooting for withdrawing subsidy on petrol and diesel because, as he declared airily, “that’s a subsidy to rich car owners.” Ahluwalia has conveniently forgotten that if the government restores even 10 per cent tax on capital gains, the country would earn much more money than it spends as subsidy on kerosene oil. But how will the cut in subsidy impact on the poor man — one among the 322 million — whose daily meal budget is no more than Rs 20? Must he die? Who cares? As India burns, its leaders ski.