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HindustanTimes Sat,25 Oct 2014

A political anatomy of the reforms push

Vinod Sharma, Hindustan Times  New Delhi, September 23, 2012
First Published: 00:18 IST(23/9/2012) | Last Updated: 00:19 IST(23/9/2012)

A choice hastened by compulsion made Prime Minister Manmohan Singh unleash reforms that were on hold for myriad reasons: a belligerent Opposition bent upon showing the UPA as dysfunctional; lack of intra-coalition consensus on policy imperatives and a torrent of scandals that showed the government moribund and in deep taint.

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Mamata Banerjee was a perennial source of worry. Within the Congress, the ruling combine's core party, the PM and his then finance minister Pranab Mukherjee weren't exactly on the same page on the political viability of big ticket initiatives.

From the way the numbers were stacked up in the Lok Sabha, Mukherjee the FM tended to play the second fiddle to Mukherjee the Leader of the House. His counsel carried weight. And it was to err on the side of caution. A hangover perhaps from the parliamentary face-off the UPA-I barely survived over the PM's pet project, the Indo-US nuclear deal!  

No surprises then that FDI in multi-brand retail was put on hold amid political uproar last December. Mukherjee's assurance to Parliament to build a consensus on the issue reflected a bipartisan approach dictated by political fires threatening to the singe the regime. At that point, the trouble shooter in Mukherjee had the better of the FM.   

The veteran Congressman's election to the Presidency in July this year by a comfortable margin was primarily on account of a divided Opposition and an isolated Mamata. That afforded the PM and Congress president Sonia Gandhi the political room and confidence they so direly needed to take on obstructionist allies and adversaries to restart the reformist push.

The coalgate interregnum washed out Parliament's monsoon session with a ringing message for the UPA: shape up or ship out. Singh's first decision while holding concurrent charge of the finance ministry - since assigned to P Chidambaram - was to set up a panel under internationally recognised taxation expert Parthasarathi Shome to address issues that came to trouble foreign investors during Mukherjee's tenure.      

The Shome committee's prescription to encourage foreign and domestic investments laid the basis for decisions that did not require legislative backing and were within the executive's domain.  Very much part of it was the formula making FDI in multi-brand retail optional for states.

"The mantra is to reduce subsidies to the extent possible, encourage investment, liberalise SEBI structures, stabilise the rupee and create jobs," explained a cabinet minister. These measures require no parliamentary approval. All that's required is the political will or the willingness to take risks.

"The party's fully behind the government's decisions," said a Congress official. He quoted from the PM's address to the nation to emphasise that governments didn't like to impose burdens on the common man: "But unlike the Opposition, we do not have the luxury to be politically expedient."

Administrative efficiency integral to implementing policies would drive ministerial changes expected over the week, the official indicated. He said absenteeism in key departments such as railways will be addressed besides showcasing India abroad as a friendly destination for foreign private and institutional investors.    

So far so good! But does the seemingly resurgent UPA have the tact and persuasive powers to make Parliament back reforms in insurance and banking sectors, not to mention legislations for modern taxation regimes such as Goods and Services Tax and the Direct Tax Code?


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