By Devesh Kumar, Priya Sahgal and Bhavna Vij-Aurora | India Today – Tue 17 Jul, 2012
On July 4, the Appointments Committee of the Cabinet headed by Prime Minister Manmohan Singh approved an extension for E.K. Bharat Bhushan
as Director General of Civil Aviation (DGCA) till November 30, 2012.
Armed with the renewed mandate to clean up the mess in civil aviation,
Bhushan wrote to the Union Civil Aviation Minister Ajit Singh
recommending that Kingfisher Airlines' licence be cancelled if it did
not pay dues to its staff. A demotivated staff, according to DGCA, could
have an adverse effect on passenger safety. On July 10, Bhushan got his
answer. Ajit Singh showed him the door. Bhushan remains in civil
aviation, but as an additional secretary. Ajit Singh termed the removal
"routine" but his colleague, former Civil Aviation Minister Vayalar
Raviexpressed shock, calling Bhushan one of the "finest officers".
It was yet another example of Prime Minister Manmohan Singh watching silently as a minister delivered a public rebuff to his authority, It has become a pattern in UPA 2. Manmohan has been snubbed by his Cabinet, insulted by ministers in public speeches, but most of all, the Prime Minister of India has failed himself.
The senior most Cabinet ministers have been preoccupied with their personal agenda, rather than collective responsibility or national policy. They are the UPA's Non-Productive Assets (NPA). Much, for instance, was expected of this year's Budget, since it was an opportunity to resurrect a moribund economy and depressed spirits through bold reforms. Instead, the highlights of the Budget were such retrograde steps as General Anti-Avoidance Rules (GAAR) and the retrospective tax proposal. As Finance Minister, Pranab Mukherjee failed to push through tax reform measures such as Goods and Services Tax (GST), Direct Taxes Code (DTC) and Insurance Laws (Amendment) Bill.
Home Minister P. Chidambaram, who is anxious to return to finance, is under fire from civil society activists and his own Cabinet colleague, Kishore Chandra Deo, for the killings of innocent villagers by CRPF in Chhattisgarh on June 28. He also seems to have picked up the foot-in-the-mouth disease from Planning Commission Deputy Chairman Montek Singh Ahluwalia, a favourite of the Prime Minister, who thought Rs. 32 a day was adequate as a daily income for the poor. Chidambaram, in a phrase which recalled Marie Antoinette's advice to the poor to eat cake if they could not find bread, wondered why the middle class complained about rising prices when it bought ice-cream for Rs 20 and bottled water for Rs 15. At a press conference in Bangalore on July 10, he had said, "We are prepared to pay rupees 20 for an ice cream cone, but won't pay one rupee more for a kilo of wheat or rice." The Opposition claimed he was mocking the middle class. The home ministry issued a statement that the "Home Minister made a matter-of-fact statement. He did not 'mock' or 'chide' anyone."
The record of the big boys in Cabinet is dismal, to say the least. Defence Minister A.K. Antony mismanaged relations with the former Army Chief, General V.K. Singh, in particular over the row on retirement age. Sharad Pawar, who has promoted himself to the Number Two spot in the Cabinet, is a savvy politician, so you will not catch him in a misstatement that alienates voters. But as a minister, he has clearly fallen short. Farmers continue to commit suicides in Vidarbha. He has often been accused of pandering to various lobbies, such as sugar producers and dairy owners. When he can, he plays to his vote bank, even if it means taking on Cabinet colleagues. On April 10, he complained to the Prime Minister about the "anti-farmer'' stand adopted by his ministerial colleagues Anand Sharma, who holds additional charge of textile ministry, and K. V. Thomas, the minister for food and civil supplies. Pawar criticised them for advocating a ban on cotton and sugar export, which was eventually reversed.
Besides the erosion of the Prime Minister's authority, UPA 2 has witnessed the collapse of the principle of collective responsibility, the essence of the Cabinet system. "As many as 183 GOMs and EGOMs have been formed till now, which are symptomatic of the Government not functioning. The Prime Minister does not control, does not talk. The only time he tried to push his way through was during the Indo-US nuclear deal," argues economist Bibek Debroy.
Other ministers are locked in their own battles, slowly unravelling the Government's infrastructure agenda. In terms of damage done by neglect, the most glaring failure surely is Power Minister Sushil Kumar Shinde. He has been holding charge of the ministry since 2006, but has been unable to bridge the growing demand-supply gap in the power sector, leading to acute electricity shortages across the country. "The country has been facing growing shortages over the past five years," admits the Central Electricity Authority in its document on National Electricity Plan, brought out in January: "During 2009-10, the peak deficit was 15,157 MW (12.7 per cent) and the average energy shortage was 84 billion kWh (10.1 per cent)." Demand for power this summer peaked at 2,17,000 MW. Power generation, at 1,99,877 MW, was much less. The power ministry blames it on the poor supply of coal and pitiable condition of state distribution companies, which have gone bankrupt. But as the Cabinet minister, it was Shinde's job to persuade the states to usher in reforms.
Some key ministers have been inducted purely on political considerations, rather than merit. Beni Prasad Verma, the Kurmi leader from Uttar Pradesh who defected from Samajwadi Party, was rewarded with the key steel portfolio in the hope that he would swing his caste votes towards the Congress. He is better known at Udyog Bhavan as the minister for Uttar Pradesh than for the steel ministry. His Cabinet colleague from Uttar Pradesh, Coal Minister Sriprakash Jaiswal, is another NPA handling a key ministry since 2009. His ministry is facing a CBI investigation into coal block allocations to private players on an arbitrary first-come-first-served basis between 2004 and 2009. The Comptroller and Auditor General estimated a loss to the exchequer of Rs 1.86 lakh crore. Since the controversy broke out in March 2012, Jaiswal first admitted that an auction would have been a more transparent method compared to allocating coal blocks at throwaway prices. Later, on June 5, he changed his mind and termed the auction process "anti-poor and anti-consumer". He said that bidding would lead to a situation where power companies would sell electricity at exorbitant rates.
Railways has become synonymous with neglect. This portfolio has been with Trinamool Congress (TMC) and has already seen a rotation of three ministers since 2009. When Mamata Banerjee left for West Bengal, she installed the pro-reforms Dinesh Trivedi but when he refused to do her populist bidding, she replaced him with the pliant Mukul Roy. After a train derailed in Assam in July 2011 following a bomb blast, Manmohan asked Roy, then a Minister of State, to visit the site. But according to PMO sources,Roy told the PM that since the track had been cleared, there was no reason for him to visit the site. Later, in March 2012, when Banerjee sacked Trivedi, the Prime Minister had no choice but to upgrade Roy to Cabinet status. From all accounts, Roy is continuing the same policy of indifference towards his ministry and obsequiousness towards his political leader Banerjee. The PMO seems to shrug when confronted with facts about railways, giving the impression that it can do little to control coalition partners. The nation pays the price for such irresponsibility.
Even ministers such as Kapil Sibal, Anand Sharma and Ghulam Nabi Azad, who were expected to deliver, have low performance ratings. Sibal is too busy balancing two heavyweight portfolios. He is sound on the drawing board but runs into hurdles at the execution stage. But he would be the last to admit that his in-tray is overflowing.
As the IT and Telecommunications Minister, Sibal announced his entry by debunking the CAG's assessment that A. Raja's decision to award 2G spectrum on a first-come-first-served basis had caused a loss of Rs 1.76 lakh crore. There had been no loss to the exchequer, claimed Sibal on January 7, 2011. His assertion caused a huge embarrassment to the UPA, as it was interpreted as a defence of Raja's role in the scam. Sibal's zero-loss bombast was subsequently negated by the Supreme Court in February this year, when it cancelled the 122 2G licences awarded during Raja's tenure as Telecom Minister. Sibal has subsequently landed the Government in a soup several times through his announcements and decisions. In December 2011, he sought to censor social media by declaring his intention to frame a code of conduct for them. The outrage was deafening. A month later, he was forced to retract his statement. And once again, in July this year, Sibal did another retraction. His proposal to unilaterally amend the Government's licensing agreement with existing telecom companies, forcing them to pay auction determined prices for the spectrum they currently hold, did not go down well either Manmohan or Ahluwalia. The issue has now been referred to an EGOM.
His colleague Anand Sharma is the face of Government failure on FDI in multi-brand retail. This is a reform the Government could have pushed through with an executive order. There is no need for the Government to take recourse to legislation to implement the decision. But the Government got its timing wrong, and tried to propel while Parliament was in session in November 2011. The Opposition and TMC disrupted Parliament, forcing the issue to be put on the backburner.
Ghulam Nabi Azad's pleas for a change of ministry have fallen on deaf ears. As a result, the Health Ministry under him is in a state of neglect. Since he is also a Congress General Secretary, most of his time is taken up by party work. The only time he makes news at Nirman Bhavan is when he comes up with strange solutions, such as when he propagated watching TV at night instead of sex as a population control method. The minister also faces a privilege motion in Parliament moved by BJP MP and member of the Standing Committee on Health, Sanjay Jaiswal. In May this year, Jaiswal cited 14 instances where he claims Azad has misled the House.
Azad's mishandling of the Congress bastion of Andhra Pradesh has seen the state slip out of the party grasp. Chidambaram announced on December 9, 2009, that the Government intended to create Telangana, stoking the ambition of pro-Telangana activists. But Azad has done everything to stall its creation. The Congress not only lost its influence in the region, but also ended up antagonising people from coastal Andhra Pradesh and Rayalseema. Azad also played a key role in precipitating Y.S. Jagan Mohan Reddy's resignation from the Congress.
Not surprisingly, the Prime Minister has been buffeted by criticism for such indecision. Yet his image managers are hoping that by keeping the finance portfolio, Manmohan could work some of his 1991 magic and win back the accolades. Team Manmohan is busy selling his plans for an economic recovery in the media, with Montek Singh Ahluwalia even giving accented interviews to the Hindi media, promising a turnaround by October.
Soon after Manmohan took over the finance portfolio on June 26, he drew up a roadmap to reverse the slide in the economy. While the long-term goal focused on giving a thrust to infrastructure development, the short-term measures included a string of steps aimed at reviving the investment climate and curbing expenditure. The first and foremost priority, PMO sources said, would be to inject taxation reforms by putting DTC in place and rolling out GST by April 1, 2013 (this was supposed to be in place by April 2010). The Prime Minister has also asked for a relook at GAAR and the retrospective tax proposal that were brought up in this year's Budget.
"There will be a move to evoke investor sentiment by implementing the decision on FDI in multi-brand retail. We will rework the draft and try to bring in various objections. We will emphasise that this is a voluntary decision and not one that is enforced on state government," explains a PMO source. He cites the case of Value Added Tax, stating that this, too, had met with opposition earlier. But once states like Haryana and Delhi implemented this tax reform measure, other states soon followed. The Prime Minister is also going to make a pitch for FDI in aviation. According to the PMO official, the note allowing foreign airlines 49 per cent stake in domestic carriers has been drafted by the Department of Industrial Policy and Promotion and will be placed before the Cabinet soon.
Manmohan has also asked Expenditure Secretary Sumit Bose to suggest ways to put a cap on subsidies in fuel and urea. The expenditure secretary has also been told to align domestic prices of fuel with international crude oil prices. Points out the PMO official, "The Prime Minister is very clear that mutual funds have to be revived in a big way. He is also weighing the possibility of raising the FDI cap in the insurance sector from the present level of 26 per cent to a higher ceiling, lower than the 49 per cent recommended by the Insurance Laws (Amendment) Bill, 2008." The legislation seeks to enhance FDI in Indian insurance companies to 49 per cent but the opposition is against this. Realising this, Team Manmohan is looking for a mutually acceptable cap.
But is all this too little, too late? The GDP growth rate in the last quarter has plummeted to 5.3 per cent, the lowest in the last nine years. The rupee's value continues its downward spiral, inflationary pressure is a cause for concern and infrastructural development has taken a severe knock. Clearly, the erstwhile market reformer's stock is at an all-time low. On June 13, Mulayam Singh Yadav and Mamata Banerjee, one a key bailout supporter and another an ally, suggested that he move out of Race Course to Rashtrapati Bhavan. On June 27, Foreign Minister S.M. Krishna pleaded with Rahul Gandhi to join the Government and "solve the problems we are facing." On July 10, senior minister Salman Khurshid called his Government directionless. Observes BJP leader Yashwant Sinha: "What we are seeing is a complete lack of governance. It brings us to the crux of the problem, which is lack of leadership."
Even the economists who once cheered him are now abandoning him. Jagdish Bhagwati and Arvind Panagariya wrote an article for Project Syndicate titled 'The Bell Tolls for the Congress Party' in which they painted a bleak future for the Congress. Time magazine called him an underachiever. His international fan club is shrinking.
There are some lessons to be learnt from the early 1990s. When Manmohan was the Finance Minister in the Cabinet of Prime Minister P.V. Narasimha Rao, he became the liberator of the Indian economy because he had the full backing of his boss. On paper, the command centre in UPA is clear: 10 Janpath handles political management while Race Course Road governs. That has not worked, especially in UPA 2 with Sonia Gandhi suffering from health problems and the Government working at random. With an eye on political benefits, Sonia has been urging Government to implement the Food Security Bill. This will inflate the subsidy burden from anything between Rs 20,000-45,000 crore. Both Mukherjee and Pawar have raised this point. But since it was Sonia's brainchild, Mukherjee had said in his 2012 budget speech that "food security will be fully provided for." However, he raised the food subsidy by a marginal Rs 2,177 crore for the year 2012-13 from the revised estimate of Rs 72,823 crore in the previous year. This led the Left to observe that the Government did not seem committed to the Bill.
After taking over the reins of the Finance Ministry, the Prime Minister has been holding meetings with key economic advisers almost on a daily basis. He has laid out a roadmap for the country's economic revival, but it remains to be seen whether he can take effective follow-up action. In the meanwhile, his Cabinet colleagues continue to make things difficult for him, as the sacking of the DGCA and the furore over Chidambaram's statement on middle class consumption showed. The Prime Minister needs to do some spring cleaning, something he has been avoiding in the first three years of UPA 2. He has to let go of underperformers such as Beni Prasad Verma, S.M. Krishna, and Sushil Kumar Shinde, or assign them less important portfolios. He also needs to reallocate key portfolios such as human resource development, IT and telecommunications, textiles, and micro, small and medium enterprises.
When Manmohan took over as Prime Minister in 2004, he was criticised by the Opposition for being Sonia's rubber stamp and inducting tainted ministers like Lalu Yadav in his cabinet. With his image still intact, an angry Manmohan took on the BJP and gave as good as he got. In Delhi, before his very first press conference in September that year, his then press adviser Sanjaya Baru asked if he wanted to refresh himself before reacting to the media. "Kya sher bhi kabhi kulla karta hai (Does a lion ever wash his mouth)?" retorted an angry Manmohan. Today, the Prime Minister is talking about reviving the "animal spirits" in the economy. Going by the diminishing credibility of this Government, it is unlikely that waking up his inner lion so belatedly will save his discredited regime-let alone his own legacy.
- With SPS Pannu
It was yet another example of Prime Minister Manmohan Singh watching silently as a minister delivered a public rebuff to his authority, It has become a pattern in UPA 2. Manmohan has been snubbed by his Cabinet, insulted by ministers in public speeches, but most of all, the Prime Minister of India has failed himself.
The senior most Cabinet ministers have been preoccupied with their personal agenda, rather than collective responsibility or national policy. They are the UPA's Non-Productive Assets (NPA). Much, for instance, was expected of this year's Budget, since it was an opportunity to resurrect a moribund economy and depressed spirits through bold reforms. Instead, the highlights of the Budget were such retrograde steps as General Anti-Avoidance Rules (GAAR) and the retrospective tax proposal. As Finance Minister, Pranab Mukherjee failed to push through tax reform measures such as Goods and Services Tax (GST), Direct Taxes Code (DTC) and Insurance Laws (Amendment) Bill.
Home Minister P. Chidambaram, who is anxious to return to finance, is under fire from civil society activists and his own Cabinet colleague, Kishore Chandra Deo, for the killings of innocent villagers by CRPF in Chhattisgarh on June 28. He also seems to have picked up the foot-in-the-mouth disease from Planning Commission Deputy Chairman Montek Singh Ahluwalia, a favourite of the Prime Minister, who thought Rs. 32 a day was adequate as a daily income for the poor. Chidambaram, in a phrase which recalled Marie Antoinette's advice to the poor to eat cake if they could not find bread, wondered why the middle class complained about rising prices when it bought ice-cream for Rs 20 and bottled water for Rs 15. At a press conference in Bangalore on July 10, he had said, "We are prepared to pay rupees 20 for an ice cream cone, but won't pay one rupee more for a kilo of wheat or rice." The Opposition claimed he was mocking the middle class. The home ministry issued a statement that the "Home Minister made a matter-of-fact statement. He did not 'mock' or 'chide' anyone."
The record of the big boys in Cabinet is dismal, to say the least. Defence Minister A.K. Antony mismanaged relations with the former Army Chief, General V.K. Singh, in particular over the row on retirement age. Sharad Pawar, who has promoted himself to the Number Two spot in the Cabinet, is a savvy politician, so you will not catch him in a misstatement that alienates voters. But as a minister, he has clearly fallen short. Farmers continue to commit suicides in Vidarbha. He has often been accused of pandering to various lobbies, such as sugar producers and dairy owners. When he can, he plays to his vote bank, even if it means taking on Cabinet colleagues. On April 10, he complained to the Prime Minister about the "anti-farmer'' stand adopted by his ministerial colleagues Anand Sharma, who holds additional charge of textile ministry, and K. V. Thomas, the minister for food and civil supplies. Pawar criticised them for advocating a ban on cotton and sugar export, which was eventually reversed.
Besides the erosion of the Prime Minister's authority, UPA 2 has witnessed the collapse of the principle of collective responsibility, the essence of the Cabinet system. "As many as 183 GOMs and EGOMs have been formed till now, which are symptomatic of the Government not functioning. The Prime Minister does not control, does not talk. The only time he tried to push his way through was during the Indo-US nuclear deal," argues economist Bibek Debroy.
Other ministers are locked in their own battles, slowly unravelling the Government's infrastructure agenda. In terms of damage done by neglect, the most glaring failure surely is Power Minister Sushil Kumar Shinde. He has been holding charge of the ministry since 2006, but has been unable to bridge the growing demand-supply gap in the power sector, leading to acute electricity shortages across the country. "The country has been facing growing shortages over the past five years," admits the Central Electricity Authority in its document on National Electricity Plan, brought out in January: "During 2009-10, the peak deficit was 15,157 MW (12.7 per cent) and the average energy shortage was 84 billion kWh (10.1 per cent)." Demand for power this summer peaked at 2,17,000 MW. Power generation, at 1,99,877 MW, was much less. The power ministry blames it on the poor supply of coal and pitiable condition of state distribution companies, which have gone bankrupt. But as the Cabinet minister, it was Shinde's job to persuade the states to usher in reforms.
Some key ministers have been inducted purely on political considerations, rather than merit. Beni Prasad Verma, the Kurmi leader from Uttar Pradesh who defected from Samajwadi Party, was rewarded with the key steel portfolio in the hope that he would swing his caste votes towards the Congress. He is better known at Udyog Bhavan as the minister for Uttar Pradesh than for the steel ministry. His Cabinet colleague from Uttar Pradesh, Coal Minister Sriprakash Jaiswal, is another NPA handling a key ministry since 2009. His ministry is facing a CBI investigation into coal block allocations to private players on an arbitrary first-come-first-served basis between 2004 and 2009. The Comptroller and Auditor General estimated a loss to the exchequer of Rs 1.86 lakh crore. Since the controversy broke out in March 2012, Jaiswal first admitted that an auction would have been a more transparent method compared to allocating coal blocks at throwaway prices. Later, on June 5, he changed his mind and termed the auction process "anti-poor and anti-consumer". He said that bidding would lead to a situation where power companies would sell electricity at exorbitant rates.
Railways has become synonymous with neglect. This portfolio has been with Trinamool Congress (TMC) and has already seen a rotation of three ministers since 2009. When Mamata Banerjee left for West Bengal, she installed the pro-reforms Dinesh Trivedi but when he refused to do her populist bidding, she replaced him with the pliant Mukul Roy. After a train derailed in Assam in July 2011 following a bomb blast, Manmohan asked Roy, then a Minister of State, to visit the site. But according to PMO sources,Roy told the PM that since the track had been cleared, there was no reason for him to visit the site. Later, in March 2012, when Banerjee sacked Trivedi, the Prime Minister had no choice but to upgrade Roy to Cabinet status. From all accounts, Roy is continuing the same policy of indifference towards his ministry and obsequiousness towards his political leader Banerjee. The PMO seems to shrug when confronted with facts about railways, giving the impression that it can do little to control coalition partners. The nation pays the price for such irresponsibility.
Even ministers such as Kapil Sibal, Anand Sharma and Ghulam Nabi Azad, who were expected to deliver, have low performance ratings. Sibal is too busy balancing two heavyweight portfolios. He is sound on the drawing board but runs into hurdles at the execution stage. But he would be the last to admit that his in-tray is overflowing.
As the IT and Telecommunications Minister, Sibal announced his entry by debunking the CAG's assessment that A. Raja's decision to award 2G spectrum on a first-come-first-served basis had caused a loss of Rs 1.76 lakh crore. There had been no loss to the exchequer, claimed Sibal on January 7, 2011. His assertion caused a huge embarrassment to the UPA, as it was interpreted as a defence of Raja's role in the scam. Sibal's zero-loss bombast was subsequently negated by the Supreme Court in February this year, when it cancelled the 122 2G licences awarded during Raja's tenure as Telecom Minister. Sibal has subsequently landed the Government in a soup several times through his announcements and decisions. In December 2011, he sought to censor social media by declaring his intention to frame a code of conduct for them. The outrage was deafening. A month later, he was forced to retract his statement. And once again, in July this year, Sibal did another retraction. His proposal to unilaterally amend the Government's licensing agreement with existing telecom companies, forcing them to pay auction determined prices for the spectrum they currently hold, did not go down well either Manmohan or Ahluwalia. The issue has now been referred to an EGOM.
His colleague Anand Sharma is the face of Government failure on FDI in multi-brand retail. This is a reform the Government could have pushed through with an executive order. There is no need for the Government to take recourse to legislation to implement the decision. But the Government got its timing wrong, and tried to propel while Parliament was in session in November 2011. The Opposition and TMC disrupted Parliament, forcing the issue to be put on the backburner.
Ghulam Nabi Azad's pleas for a change of ministry have fallen on deaf ears. As a result, the Health Ministry under him is in a state of neglect. Since he is also a Congress General Secretary, most of his time is taken up by party work. The only time he makes news at Nirman Bhavan is when he comes up with strange solutions, such as when he propagated watching TV at night instead of sex as a population control method. The minister also faces a privilege motion in Parliament moved by BJP MP and member of the Standing Committee on Health, Sanjay Jaiswal. In May this year, Jaiswal cited 14 instances where he claims Azad has misled the House.
Azad's mishandling of the Congress bastion of Andhra Pradesh has seen the state slip out of the party grasp. Chidambaram announced on December 9, 2009, that the Government intended to create Telangana, stoking the ambition of pro-Telangana activists. But Azad has done everything to stall its creation. The Congress not only lost its influence in the region, but also ended up antagonising people from coastal Andhra Pradesh and Rayalseema. Azad also played a key role in precipitating Y.S. Jagan Mohan Reddy's resignation from the Congress.
Not surprisingly, the Prime Minister has been buffeted by criticism for such indecision. Yet his image managers are hoping that by keeping the finance portfolio, Manmohan could work some of his 1991 magic and win back the accolades. Team Manmohan is busy selling his plans for an economic recovery in the media, with Montek Singh Ahluwalia even giving accented interviews to the Hindi media, promising a turnaround by October.
Soon after Manmohan took over the finance portfolio on June 26, he drew up a roadmap to reverse the slide in the economy. While the long-term goal focused on giving a thrust to infrastructure development, the short-term measures included a string of steps aimed at reviving the investment climate and curbing expenditure. The first and foremost priority, PMO sources said, would be to inject taxation reforms by putting DTC in place and rolling out GST by April 1, 2013 (this was supposed to be in place by April 2010). The Prime Minister has also asked for a relook at GAAR and the retrospective tax proposal that were brought up in this year's Budget.
"There will be a move to evoke investor sentiment by implementing the decision on FDI in multi-brand retail. We will rework the draft and try to bring in various objections. We will emphasise that this is a voluntary decision and not one that is enforced on state government," explains a PMO source. He cites the case of Value Added Tax, stating that this, too, had met with opposition earlier. But once states like Haryana and Delhi implemented this tax reform measure, other states soon followed. The Prime Minister is also going to make a pitch for FDI in aviation. According to the PMO official, the note allowing foreign airlines 49 per cent stake in domestic carriers has been drafted by the Department of Industrial Policy and Promotion and will be placed before the Cabinet soon.
Manmohan has also asked Expenditure Secretary Sumit Bose to suggest ways to put a cap on subsidies in fuel and urea. The expenditure secretary has also been told to align domestic prices of fuel with international crude oil prices. Points out the PMO official, "The Prime Minister is very clear that mutual funds have to be revived in a big way. He is also weighing the possibility of raising the FDI cap in the insurance sector from the present level of 26 per cent to a higher ceiling, lower than the 49 per cent recommended by the Insurance Laws (Amendment) Bill, 2008." The legislation seeks to enhance FDI in Indian insurance companies to 49 per cent but the opposition is against this. Realising this, Team Manmohan is looking for a mutually acceptable cap.
But is all this too little, too late? The GDP growth rate in the last quarter has plummeted to 5.3 per cent, the lowest in the last nine years. The rupee's value continues its downward spiral, inflationary pressure is a cause for concern and infrastructural development has taken a severe knock. Clearly, the erstwhile market reformer's stock is at an all-time low. On June 13, Mulayam Singh Yadav and Mamata Banerjee, one a key bailout supporter and another an ally, suggested that he move out of Race Course to Rashtrapati Bhavan. On June 27, Foreign Minister S.M. Krishna pleaded with Rahul Gandhi to join the Government and "solve the problems we are facing." On July 10, senior minister Salman Khurshid called his Government directionless. Observes BJP leader Yashwant Sinha: "What we are seeing is a complete lack of governance. It brings us to the crux of the problem, which is lack of leadership."
Even the economists who once cheered him are now abandoning him. Jagdish Bhagwati and Arvind Panagariya wrote an article for Project Syndicate titled 'The Bell Tolls for the Congress Party' in which they painted a bleak future for the Congress. Time magazine called him an underachiever. His international fan club is shrinking.
There are some lessons to be learnt from the early 1990s. When Manmohan was the Finance Minister in the Cabinet of Prime Minister P.V. Narasimha Rao, he became the liberator of the Indian economy because he had the full backing of his boss. On paper, the command centre in UPA is clear: 10 Janpath handles political management while Race Course Road governs. That has not worked, especially in UPA 2 with Sonia Gandhi suffering from health problems and the Government working at random. With an eye on political benefits, Sonia has been urging Government to implement the Food Security Bill. This will inflate the subsidy burden from anything between Rs 20,000-45,000 crore. Both Mukherjee and Pawar have raised this point. But since it was Sonia's brainchild, Mukherjee had said in his 2012 budget speech that "food security will be fully provided for." However, he raised the food subsidy by a marginal Rs 2,177 crore for the year 2012-13 from the revised estimate of Rs 72,823 crore in the previous year. This led the Left to observe that the Government did not seem committed to the Bill.
After taking over the reins of the Finance Ministry, the Prime Minister has been holding meetings with key economic advisers almost on a daily basis. He has laid out a roadmap for the country's economic revival, but it remains to be seen whether he can take effective follow-up action. In the meanwhile, his Cabinet colleagues continue to make things difficult for him, as the sacking of the DGCA and the furore over Chidambaram's statement on middle class consumption showed. The Prime Minister needs to do some spring cleaning, something he has been avoiding in the first three years of UPA 2. He has to let go of underperformers such as Beni Prasad Verma, S.M. Krishna, and Sushil Kumar Shinde, or assign them less important portfolios. He also needs to reallocate key portfolios such as human resource development, IT and telecommunications, textiles, and micro, small and medium enterprises.
When Manmohan took over as Prime Minister in 2004, he was criticised by the Opposition for being Sonia's rubber stamp and inducting tainted ministers like Lalu Yadav in his cabinet. With his image still intact, an angry Manmohan took on the BJP and gave as good as he got. In Delhi, before his very first press conference in September that year, his then press adviser Sanjaya Baru asked if he wanted to refresh himself before reacting to the media. "Kya sher bhi kabhi kulla karta hai (Does a lion ever wash his mouth)?" retorted an angry Manmohan. Today, the Prime Minister is talking about reviving the "animal spirits" in the economy. Going by the diminishing credibility of this Government, it is unlikely that waking up his inner lion so belatedly will save his discredited regime-let alone his own legacy.
- With SPS Pannu
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