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Prime Minister's crisis as an opportunity

Whether a political crisis weakens or empowers the PM depends on what use is made of it

Sanjaya Baru  |  New Delhi 

Whether a political crisis weakens or empowers the PM depends on what use is made of it

No one knows this better than Prime Minister Manmohan Singh that every crisis is an opportunity. His professional career took off in the early 1970s when he was called in by the prime minister of the day to handle India’s worst inflationary crisis. Speaking at the Hindustan Times Leadership Summit on Saturday, Dr Singh referred to the green revolution of the 1960s as an example of turning a crisis into an opportunity. He also mentioned the economic reform and liberalisation programme of the early 1990s as another example of turning a crisis, the balance of payments crisis of 1990, into an opportunity. He forgot to mention the third example, of the stock market scam of 1992, of a crisis that forced the pace of reform. As Union finance minister, he launched the most far-reaching reform of the Indian financial sector.

The balance of payments crisis gave an opportunity to India’s economic reformers to put in place a series of policy measures that ended the infamous “Licence Permit Raj”. It was not an easy coup. Not only did Dr Singh, as the finance minister of the day, have to deal with ideological opposition from the old Nehruvians and self-styled Congress socialists, but also from leaders of Indian business, the so-called “Bombay Club”. The status quoists thought of many reasons why the changes being made would hurt the country, but the reformers had the last laugh.

Then came the stock market crisis and there were demands both from the Opposition and from within the ruling party for Dr Singh’s resignation. He and a bunch of financial experts turned that crisis into an opportunity by undertaking the most comprehensive reform of India’s archaic and corrupt financial sector. New institutions like the Securities and Exchange Board of India were strengthened and ones like the National Stock Exchange created.

For a politician with this kind of track record in turning crises into opportunities for doing good, the present political crisis caused by revelations pertaining to corruption in government should be yet another opportunity for reform of India’s political system.

As the author of a report on political party financing and election funding, there are many ideas on political reform that Dr Singh can implement. He can also empower regulators, reduce arbitrary powers of civil servants and ministers, reshuffle his Council of Ministers, dropping those who have gained notoriety for being fund collectors and promoting those who have established a reputation for probity in public life.

Whether the prime minister is able to turn this crisis into an opportunity for reform and change or not depends on three critical factors. These are factors that enabled him to do what he did in the 1990s.

First, the prime minister has to secure more political authority for himself, and make use of that. Second, he needs a team that can deliver the change he seeks. Third, he needs practical policy options that can be put in place.

In 1991 and 1992, Dr Singh got that political cover from Prime Minister P V Narasimha Rao. This time he will need it from the chairperson of the United Progressive Alliance (UPA), Sonia Gandhi. But, there is a difference. As finance minister, Dr Singh had every right to demand and expect that political cover from the prime minister of the day. As prime minister, Dr Singh will have to create some of that political cover for himself, and not just depend on the UPA chairperson and Congress party president.

Prime ministership is a political office. There are political initiatives that Dr Singh can and must take to be able to turn the present crisis into an opportunity. There will be resistance. He will have to deal with it. As he indeed did when he pursued the civil nuclear cooperation agreement with the United States.

Recall his August 2007 ultimatum to the Left Front, through a newspaper interview, to either support his initiative or withdraw its support. He took a political stance. Some in his party did not like him doing that. Their view was that the formation, management and dissolution of a coalition was not the job of the PM. This was “political management” that was best left to political managers.

This is a spurious argument in India’s parliamentary system. A prime minister has to do his own political management sometimes to take forward his policy initiatives within government and in Parliament. It appears it was this very same spurious argument that finally forced him to re-induct A Raja into his Council of Ministers in May 2009.

Incidentally, Dr Singh was not the first PM to be so constrained. When Prime Minister Atal Behari Vajpayee wanted to retain Suresh Prabhu of the Shiv Sena in his ministry, to pursue power sector reforms, the Sena supremo, Bal Thackeray, heaped scorn on him and showed him who was the boss by forcing Mr Prabhu out. Such turf wars are par for the course in coalition management and a prime minister must be willing to fight his political battles to be able to pursue his policy agenda.

Second, no prime minister can pursue reform without an agenda and a team that can create and implement that agenda. UPA-II needs a new governance agenda. Too much of today’s policy is still based on yesterday’s agendas. Between fiscal populism and technocratic fixes, there is not enough of institutional and governance reform on offer.

This crisis has, in fact, come at a good time. The popular view, as reflected in many polls, is that the first year of UPA-II has been wasted. There is no better time than now to define a new agenda of governance and political reform for the remaining four years, and get a team that can deliver.

First Published: Mon, November 22 2010. 00:58 IST