Political Compulsions Pushing Reforms Back

Last month, the ruling Liberal Party in Australia held a grand convention in Melbourne. All eyes were glued on the Australian Prime Minister, John Howard, who used the occasion to re-establish his leadership of the party. Mr Howard is under attack both from the Opposition and his own party. His government is in the midst of implementing a controversial value-added tax regime in Australia. The Liberal Party is naturally worried over the prospects of its returning to power at the general election due to be held next year.

The grand convention was essentially meant to mobilise the support of the party members at various levels and remind them that controversial economic reform measures like the value-added tax were necessary for the economy. Not surprisingly, Mr Howard invited a former Prime Minister of Australia and a member of the Liberal Party, Malcolm Fraser, at a dinner organised as part of the grand convention. Mr Fraser was felicitated as the man who steered the Australian economy through its worst crisis and took many bold and tough economic decisions despite the risk of his party losing popularity and votes.

 

Mr Howard was a bitter critic of Mr Fraser when the latter was Prime Minister. But this did not come in the way of Mr Howard felicitating Mr Fraser and the Liberal Party honouring one of its former leaders at a dinner party. Even as one sat through that dinner in Melbourne, the thought of P V Narasimha Rao, the Congress party, and Sonia Gandhi occupied the mindspace almost inevitably. The parallel with India is not obvious. The Congress party is no longer the ruling party. Neither is Sonia Gandhi the country's Prime Minister. But one can compare Mr Rao with Mr Fraser. Both are by far the boldest and most successful reformist Prime Ministers the two countries have seen so far. But Mr Fraser in Australia is honoured by his party and colleagues for the bold steps he took as Prime Minister. Can anybody in Congress even dream of honouring Mr Rao for the manner in which he brought the Indian economy back from the brink of economic disaster?

One argument would be that the credit for ushering in economic reforms should not go entirely to Mr Rao. Manmohan Singh, finance minister in Mr Rao's regime, was the real reformer. But if you ask Dr Singh, his answer would be that he could do all that he achieved because he had the full support of the Prime Minister. One now knows of the well-publicised stories of how the finance minister went ahead with the second dose of devaluation of the Indian currency in July 1991, even though there he had no explicit approval of the Prime Minister.

Even as Mr Rao was trying to reconcile conflicting political views on hard steps on cutting fertiliser subsidies, he had to contend with a threat of resignation from his finance minister. He handled it with great poise, with nobody in the government getting even a hint of the crisis that the government went through. An adamant finance minister made public his resignation in the wake of the controversy over his role in the multi-crore securities scam. But Mr Rao managed to calm Dr Singh down and persuaded him to stay on in the government.

True, the reforms pace slowed down in the last three years of his five-year tenure. But Mr Rao believed that the only way he could find a mention in the history books was to change the contours of the Indian economy for higher growth and prosperity for its people. It is a pity that today the Congress under the leadership of Sonia Gandhi is planning to redraft the party's economic policies, to make it almost diametrically opposite to what Mr Rao and Dr Singh wanted to do between 1991 and 1996.

It is, therefore, logical to see politicians flaunting an anti-reforming stance flourishing in a country like India, where leaders who pushed for more reforms are easily forgotten and cast aside. The likes of Mamata Banerjee, Ram Vilas Paswan and Sharad Yadav feel encouraged. Even the system rewards them with key ministerial portfolios in the government. Ms Banerjee is the railway minister, Mr Paswan decides the fate of the telecom revolution and Mr Yadav sits in judgement over whether Indian airline companies should face competition from foreign airlines or not.

The fact is that each of these ministers has a strong vote bank and no Prime Minister can ignore what they want from the government. The net result is that all reformist steps are measured with the yardstick of popularity. If recruiting more people or not retrenching surplus employees help strengthening the voters' constituency, why would Mamata Banerjee reduce the Indian Railways manpower strength?

Even industry chambers and associations have begun seeing the political compulsions. The danger is that industry leaders are now beginning to understand and even appreciate the standpoints adopted by these ministers. A few days ago a leading international organisation, involved with conducting national seminars on Indian economy, came to New Delhi seeking ways to expedite the process of economic reforms in this country.

The only way for such well-intentioned organisations seems to be play the role of a mediator between the anti-reformist ministers in the present government in India and the industry leaders. For far too long have most industry chambers and associations have refrained from exposing anti-reformist ministers to their membership through public meetings. Businessmen from India and abroad have been routinely exposed to ministers like Rangarajan Kumaramangalam, Murasoli Maran and Yashwant Sinha. Now, the time for presenting Mamata Banerjee, Ram Vilas Paswan and Sharad Yadav to industrialists and businessmen has come, so that real problems in reforms in India come out in the open.