We Are At The Bottom Everywhere

Q: Since there has been a change in government, there has been a perception that nothing much is happening in the government. Is that a correct perception?

A: Im not sure about that. A lot of the routine work continued. The nation never felt anything was amiss. We have had three or four crises, like the ATC strike. As far as the momentum of economic and other policy decisions is concerned, yes, there was a hiatus. Naturally, when a new government comes, it takes 15-20 days. But I can assure you that the momentum has started again. You will see again, over the next two or three months, the same old pace.

 

Q: What sort of things do you expect?

A: I think in the infrastructure sector we have to take decisions, because firstly this year Rs 63,000 crore of public investment has to take place. Then we have to open the door for a lot of private investment. I think we need in the plan period something like 50,000 mw, including the backlog. The last plan failed by about 18,000 mw. We have proposals for 50,0000 mw, both public and private, but those 50 we have to convert into ground reality. Construction will have to start in three to six months. Thats only the plan target, because the gestation period is three years. So a lot of policy decisions have to be taken relating to the forest sector, environmental clearance, finances, tax pass-through issues, streamlining tariff notification issues. I hope all these will be in the next month or so.

Q: But isnt that a problem? Even something as long pending and so obviously necessary as petroleum price hikes, you are unable to move.

A: No, they are two separate things. These are all routine administrative decisions to streamline procedures. So here we have to say, what is the procedure by which environment clearance is given without delay, at the same time without sacrificing the environmental requirements. There is no political issue involved here. It is the bureaucrats that have to sort it out. Similarly, what is the tariff notification, terms and conditions? What are the fuel linkage terms and conditions? So we have had for example about 12,000 mw for the naphtha project, liquid-fuel based fired projects. Now we are still groping to give clearances so that people can start. I believe about 8,000 worth clearances are given and another 4,000 is left. Hopefully, in the next month or two, they will be given. So, these are all in the power sector. Then we have to find a way by which we can stimulate investment in the power transmission sector. There is a logjam there. We have to find a way to handle that logjam.

Q: The legislation for that could not be passed...

A: For some reason. But now we have to see. It was on a technical ground that it was not passed. But nobody is objecting to it on substantive grounds. After all, everybody realises that massive investments are required in the transmission sector. Otherwise the 50,000 mw will not move. They are not going to be consumed where the power station is. So we have to clear that logjam over the next month or two. Then we have four-laning of two-lane National Highways, new BOOT highways. In every sector we are moving. We have to follow through on some of the changes in the coal sector. Very soon the momentum will be back. You may remember, between December and February, there were a spate of economic decisions, continuous decisions.

Telecom has moved. In power, we are very close to closing the counter-guarantee cases. Once these are done, it will help not only the counter-guarantee cases, because the same issues are now going to recur for the other private projects also. So the work done in the last six months is going to come in handy.

Q: There has been so much talk of disinvestment and the disinvestment commission but ...

A: Dont forget that after the bad experience we have had earlier, it is a remarkable job for VSNL. In fact they are talking about the VSNL issue being the issue of the year in Europe. Thats the kind of reputation it has got now. So the expectation is very high now. I expect that something more will happen this year.

Q: On VSNL, or.....

A: No, VSNL is over. We will have follow ups now.

Q: But the commission itself is not able to move. The industry ministry wants to move it to the finance ministry and ....

A: See, there are two different things the investment commission and its report. The report has come. We have to look at and see where we agree and put it through. Where we dont agree, we have to say that. I am not going to get into the controversy.

Q: What about insurance? Even on health insurance, we have not been able to move on.

A: On health insurance, I dont really know the latest, but we have removed some ceilings in GIC and LIC. As I said, you will see the momentum.

Q: Do you think financial institutions also will gradually become more independent?

A: Yes, they will. Now I am not hearing the same complaint I used to regularly receive six months back, like money is very tight, money is not available, is very costly. Now, there is a sea-change. I meet all kinds of people here. But nobody has recently complained to me of costly money or difficult money. There was then some talk that bankers are reluctant to give money, they say somebody is arrested and... I find by and large that things are changing now.

Q: But there is a perception in general that this is a weak government. Do you agree with that?

A: I dont think economic decision-making is going to slow down. You asked why there is no movement in petroleum. It is not a clear cut case, in the sense all economic indicators say that you should do it. There is a strong political indicator which says you should not do it. It has to happen sooner or later. It will happen, because ultimately it is a running sore and you have to tackle it. Itll happen, sooner or later.

Q: Despite that the political reality has not changed?

A: After all, everybody has to be convinced. Many people say, okay, it is a large country and you can afford it. What is the answer to that? This will be a burden on the poor man. This is a correct argument. Why dont you have more sales tax, excise duties somewhere else, why do you want to charge here? These are all arguments. So we have to see if there is an alternate area where Rs 10,000-12,000 crore can be raised.

Q: Even the functioning of the CBI has become so controversial. The perception is that the centre is weak. Is that a valid perception?

A: I dont think it is fair to say that. The centre has said that we will not interfere in the investigation of cases. Is that a weak persons statement?

Q: There has been a controversy about the CBI director issuing press statements.

A: Controversies are there all over, all the time. What the prime minister said was unexceptionable. He didnt talk about the CBI in particular. Our investigating agencies should concentrate on investigation, should not do sensational things, so that the public attention is deviated on some charge sheet going to be given or papers to be given. He says, you do your work quietly, you file it and let the court decide what has to be done and the punishment has to be given. We will not tell them, go slow or hit hard, hit somebody or withdraw from somebody.

Q: Is the economic agenda still the top priority of the government, as it has been for the last two years? Or is it international affairs now?

A: International affairs is always important and, with the prime minister also being the external affairs minister, naturally, adequate time will be given to that. But I think the economic agenda continues. The prime minister has a strong social agenda and has been pressing for the womens bill. I think, it is an all-round government with many faces and many facets.

Economic reform is going to continue. It is necessary, it is imperative. If we have to move even with what Malaysia, Thailand and Indonesia have been doing. Otherwise you are going to remain in the bullock cart age. There is no choice now. We will be left totally out of the mainstream. We will be like Zaire or some such country. Already we are 135 in the human development index out of 170. We are at the bottom everywhere. So there is no choice now.Economic reform is going to continue. It is necessary, it is imperative. If we have to move even with what Malaysia, Thailand and Indonesia have been doing. Otherwise you are going to remain in the

bullock cart age. There is no choice now.