UPA's second wind

Government shows signs of life time for fuel price reform

For most of its second term in office, the United Progressive Alliance (UPA) government has been a study in inaction. Its Cabinet has sent out mixed signals on policy; it has been unable to push legislation through Parliament; its decision-making bodies, mainly groups of ministers, have repeatedly been unable to evolve consensus on difficult issues; and even its control over basic administrative matters has been weak and inefficient. It is difficult to deny, however, that there appears a new energy to its actions in recent months. After the first push by Prime Minister Manmohan Singh in September to foreign direct investment that led to the departure of the Trinamool Congress from the alliance, and following the reallocation of various portfolios in the Cabinet reshuffle that took place shortly thereafter, there was something of a lull. However, the recent activity by the Union Cabinet, in which it has cleared almost everything that has been laid before it, and what has been by the standards of this Lok Sabha an almost fruitful session so far in spite of frequent and unnecessary adjournments, has given rise even among cynical observers to some cautious optimism.

In this session of Parliament alone, the long-delayed Companies Bill and the banking reform Bill were passed. The former still has severe problems in its drafting, but when set against the number of attempts made for years – even decades – to pass it, it is still worthy of note. Meanwhile, the Cabinet has cleared the Land Acquisition Bill, which will be taken up by Parliament next year. Also, the administrative logjam that has contributed to the fall-off in investment, crippling the Indian economy, may begin to be alleviated by the formation of the Cabinet Committee on Investment, headed by the prime minister, and which is supposed to force central ministries to iron out their differences and expedite clearances for major projects. And the government is finally aggressively pushing the Unique ID scheme as the backbone for transfer delivery reform — indeed, setting such quick timetables for its roll-out that even many of the UID’s supporters are worried that it is not giving itself enough time to detect and fix problems. Excessive speed has not, hitherto, been UPA-II’s problem.

What could have rung in these changes? It has not escaped notice that this activity began when three things happened. First, the departure of Pranab Mukherjee to Rashtrapati Bhavan and his replacement as finance minister by P Chidambaram. Second, the hammering of Prime Minister Manmohan Singh’s reformist reputation in the world media — and, by extension, the global understanding that his government has been profligate with finances, and the very real threat that Dr Singh’s legacy might be a downgrade of India’s rating to junk status. And third, the realisation that straitened government finances and the investment slowdown would destroy the ability to act on the high-growth, high-social expenditure consensus that passes for ideology in Sonia Gandhi’s Congress. Together, these three factors have apparently increased UPA-II’s coherence on reform. The next step, one the government must take, is to put in place a credible mechanism for reducing fuel subsidies. If that’s done soon, optimism will begin to be a little less cautious.