There Is No Consensus On Reforms
The Budget session of Parliament saw the Congress joining the Left parties in opposing subsidy cuts and privatisation of public sector undertakings. Has the Congress changed its economic policy or is this, as some leaders say, a "mid-course correction"? Bharati Sinha spoke to Madhavrao Scindia, Congress deputy leader in the Lok Sabha.
Q: What are your party's views on subsidies?
A: No subsidy should be cut to increase the burden on the poor, or on a section which has a position of priority in our economy, such as the farmers. This should be kept in view particularly when due to indiscriminate import of sugar, wheat, edible oil, and lifting of QRs two years before the deadline there is already pressure on Indian growers.
A 100 million families are facing intolerable odds due to severe drought. Reports of suicides are coming in from even those states which are considered granaries of India. Is this the time to raise the price of urea by 15 per cent?
We are saying no to subsidy cuts because the economic condition is not such that the people can bear the burden. What about the government cutting its expenditure? A symbolic gesture was made last year. One secretary's post was abolished. But many more were added soon after. When I was a minister in 1991, because of the critical situation prevailing then the Prime minister and the finance minister were exceedingly severe in matters concerning expenditure like foreign travel. Has the government set an example?
Q: Why is your party opposing the government's disinvestment programme?
A: We believe that divestment should be on a case-to-case basis. A number of factors must be taken into consideration. If the public sector undertaking is efficient, why should the government be in a hurry to throw away a family jewel?
An example is that of the Gas Authority of India. Granted that a small percentage of equity was sold. But the party to whom it was sold was its strong competitor.
Secondly, would you dispose of a large source of livelihood? In the case of Modern Foods, its 4,500 employees have been told by its new owners that only 700 will be retained.
Has the government got an alternative plan of redeployment, alternative training or assistance from the safety net concept? I asked this question in Parliament but the finance minister did not reply.
Thirdly, if a decision is made to make a sale, proper market strategy and timing become important. Has the government done that? The finance minister did not respond to my question on Modern Foods as to whether the real estate value for arriving at the share value of the company was taken at written down cost, or as per prevailing market price? Why did the minister not respond to me on the floor?
Q: Would you also oppose corporatisation?
A: Corporatisation may be necessary in cases where government holding ensures that certain social obligations are carried out.
For example, to ensure that a proper safety net is provided in retrenchment of additional staff. Or for controlling pricing of a product if it is something of a basic nature whose pricing affects a large segment of the economy.
Q: Replying on subsidy cuts, the finance minister said there was consensus on cutting expenditure. Your comments?
A: There is no consensus as far as we are concerned. There is no attempt either to create a consensus. Only the government keeps airing these views. Consensus is a non-existent veil which the government tried to hide behind.
Q: You had hinted earlier that a possible mid-course correction in Congress' economic policies was on the cards. Is there any correction?
A: Congress has adopted economic policies in the context of the requirement of the time and keeping in view the party's overwhelming concern for the uplift of the economically weaker sections of the society. The critical financial situation bequeathed to us in 1990-91 and the evolving scenario in the 90s made it imperative to keep in step with the global trends. Our policies were also made keeping in view the liberalisation and globalisation of the world economy that was taking place then. Today, the unprecedented growth of information technology and the emergence of the world as a global village makes it imperative that in formulating our domestic policies we must take serious note of international developments in trade, commerce, investment and technology.
At the same time what is more important is that our economic policy must have a direct effect on our poverty level ultimately leading to elimination of poverty. We are not prepared for a trickle-down effect on the economically weak.
Q: So the correction is situation specific.
A: Assessments have to be made from time to time as the situation in the economy is never static and course correction may become necessary, without altering the fundamental in any major fashion.
The need is for constant evaluation whether policies can be more effective in minimising the urban-rural divide, in creating larger employment, in prioritising infrastructure investment, in reducing poverty, in giving indigenous entrepreneurs a fair chance against international competition or against wholesale takeovers. There are many such priorities which must be achieved through fiscal and monetary instruments. I do not believe in an open-ended approach. It has to be tempered to suit the particular need of our own country.
Q: The Congress has been giving confusing signals on the nuclear policy. What exactly is your party's view on the need for India to have a minimum credible nuclear deterrent?
A: The decision of going nuclear is one which successive governments had given thought to as the capability did exist. The issue was as to whether the critical decision of nuclearisation from the point of view of defence should be taken.
In my view only the government is in a position to take such a decision. In fact, not even the government, but really the Prime Minister. Because, he is the one single individual in the entire Cabinet who is solely privy to all the information inputs that are required for coming to a decision.
Q: What kind of information you are talking about?
A: Such information would consist, on the level of capability of our potential adversaries; intelligence information as to their nuclear plans; the level of India's capability; and international factors that would affect India's position, particularly from the economic angle in matters of development financing, etc. I feel the controversy regarding a minimum credible nuclear deterrent is unnecessary. What the Prime Minister has not specified is what does he mean by a minimum credible nuclear deterrent. This is the typical generalisation that the Prime Minister indulges in.
Q: Can you be more specific?
A: Yes. For instance, we are not privy to the specific technology level achieved by our potential adversaries. Therefore, what is the level of the minimum credible nuclear deterrence that he is talking about? Secondly, with the announcement of "no first use" by the Prime Minister, it implies that India must have a retaliatory capability which would be able to survive a first strike and then would cause unacceptable damage to the target country. Therefore, obviously the system would have to be of a much higher level.
How much would it cost? What would be the delivery system? Would it be land-based, sea-based, or from the air? In each system, the costs vary greatly. What would therefore be the cost of his (Prime Minister's) concept of a minimum credible nuclear deterrent? It is for this reason that without these information inputs it is impossible for any party to merely give a blank cheque to the government without any knowledge of the contours, the size, the shape, the colour, the species of the deterrent. All this information is required before a full clarification is given. The Prime Minister has not even clarified a question that I asked after the Pokhran blast about command and control structure.
Isn't it high time he told the nation about this?