Economy Aug 30, 2013
The big question after Prime Minister Manmohan Singh's Rajya Sabha speech on the afternoon of 30th August has to be: What did he have for lunch?
Singh was his usual tepid self when he addressed the Lok Sabha at noon, regurgitating for the umpteenth time how 'the fundamentals' of the economy were strong (and that the rupee had merely caught a cold because Ben Bernanke sneezed), never mind the reality that the just about every fundamental of the economy whether the fiscal deficit, current account deficit, growth or inflation are awry. The economist Prime Minister tried to reassure investors that reforms (and the minor matter of project clearances) were underway, and that GDP would begin to pick up from the second quarter of 2013-14.
But after lunch, the Prime Minister abandoned his quiet economist avatar and chose to don the role of the political combatant. Perhaps because of heckling from BJP MPs, Singh stood up to defend himself more aggressively than at any time in the recent past. He chided the BJP when he pointed out that no other Parliament in the world treated a Prime Minister with such contempt, calling him names (PM chor hai). Singh criticised the BJP for not allowing Parliament to function, pointing out how that had eroded the confidence of investors. He insisted that despite insinuations from the Opposition, he commanded respect in the council of ministers. He even pointed out how he was highly regarded as an economic thinker in international forums like the G-20. In short, he was reaffirming his credentials of leadership, while continuing to insist that the economy was not going downhill.
Coming from Manmohan Singh, it was a terrific performance. Alas, it was only (highly watchable) theatrics. The Prime Minister's script had nothing to offer concerned citizens and nervous investors. In his Lok Sabha speech, Singh signaled three reforms that were necessary to address the structural problems in the economy: reduction of subsidies, cutting bureaucratic red-tape and implementing the Goods and Service Tax (GST). He demanded the Opposition's cooperation in tackling these "not so low hanging fruits". Putting the onus on the opposition for subsidies and bureaucratic red-tape is subterfuge. These are executive decisions which need no legislative approval. If the PM was serious about reforming subsidies, he would have announced a complete deregulation of diesel prices on the floor of the house, or a cut in fertilizer subsidies. In the absence of concrete measures, nobody is going to take him seriously on subsidies just days after the Government passed a hugely expensive food security legislation. Similarly, the Opposition is not stalling him from administrative reform. Unfortunately on evidence the bureaucracy is becoming more dysfunctional with every passing day.
The Prime Minister's failure to protect the interests of the victimised Durga Shakti Nagpal, an IAS officer in Uttar Pradesh, was a blow to those select bureaucrats who act honestly in the public interest. On the GST, the Prime Minister has a right to quibble with the BJP, but as leader of the Union Government the onus is on him to provide a satisfactory solution to the logjam. In the end, the Prime Minister's speech on the economy provided no real solutions to the crisis. It did not even inspire the more intangible confidence factor.
There is no doubt that Manmohan Singh has very strong survival instincts. We saw them in the Rajya Sabha today. Unfortunately, his instincts in self-preservation have rarely extended to a desire or perhaps ability to protect and enhance public interest. In 2014, Singh would have been prime minister for a lengthy ten years - despite scandal and incompetence - but his longevity would have by then extracted a very high cost: the destruction of the nation's economic well-being.
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