Offence is the best form of defence. The week that just went by showed Prime Minister Manmohan Singh, who was under intense attack both from within his party and without, for his alleged indecisiveness, at his aggressive best. Scandals and roll-backs have become commonplace in the second innings of the Congress-led United Progressive Alliance of Dr. Singh.
By touching diesel (considered a common man’s fuel) and unleashing what are often believed to be politically incorrect reform initiatives (especially the opening up of foreign direct investment into the largely sensitive multi-brand retail space), the inscrutable Dr. Singh has staked not just the survival of his government but also his personal reputation. Hailed as the architect of the Indian reform process by the world at large during his tenure as the country’s finance minister in the then minority Congress Government of late Narasimha Rao, the image of Dr. Singh has been severely dented due to a series of ‘mishaps’ ever since he commenced his second innings as the captain of UPA II.
Pushed to the precipice, Dr. Singh has chosen to plunge into a headlong war with his critics and opponents alike by speaking the language he knows best — that of reform. By rolling all in one bundle, and unleashing them simultaneously in quick succession, the Prime Minister has deflected a focussed opposition (which has seen Parliament go dysfunctional in the wake of ruckus created by the Coalgate) from ‘a political to economic war terrain’, which is lot familiar to him. When pushed, he could hit back decisively. Who could forget the way he pushed his way into passing the nuclear bill by jettisoning the Left from the UPA I? If he wanted, he could have his way.
The latest announcements (largely perceived to be unpopular) reinforce this ‘stern trait’ in Dr. Singh. The question now is not about his ability to take tough action. It is more to do with the timing. Why now? The TINA (There is no alternative) factor is working right through his tenure — be it in his first innings as the head of the government or during the current one. The timing of the far-reaching announcements (from hiking diesel price to letting foreign direct investments in assorted controversial sectors ranging from multi-brand retail to aviation and broadcasting) gives a huge handle to political opponents, who see in them a manipulative exercise to deflect the focus away from the Coalgate scandal. The government of Dr. Singh, as often remarked jocularly in the opposition circles, seems to have found an innovative solution to resolve the crisis. As one industrialist quipped tongue-in-cheek, “It surmounts one problem by creating another.”
If one takes the politics bit out of it for a moment, these measures are inevitable, and well nigh unavoidable in the context of current scene in the Indian economy read in tandem with happenings across the globe. High fiscal deficit is a sure recipe to disaster. On top of it, the country is witnessing spiralling prices. Supply constraints in an inflationary situation make the situation further tougher. As a nation, the country is fast hurtling towards a stagflation situation. India cannot afford to continuously remain in the high-cost zone. It doesn’t help the domestic economy. It was no good for the export economy either. Governments often play to the gallery by letting the freebies continue, and resort to hefty borrowing to finance the fiscal deficit. This keeps the private sector borrowers out mostly. This will have a negative fall-out on new investments with consequential adverse impact on production, jobs et al. When you add the trade deficit, the cup of woes is really overflowing.
If last week’s announcements are read against this none-too-encouraging backdrop, Dr. Singh deserves a pat on the back for moving in the right direction. The timing of the action, however, has, unfortunately, drawn the focus from the very intention of these announcements. Predictably, questions have again been raised if Dr. Singh’s government will ‘roll-back’ again! The TINA factor could slowly be evaporating given the turns politics is taking these days. The ‘bundling’ of measures, however, may have splintered the Opposition focus and help the Dr. Singh government ‘stay still’!
Past week in a way signalled that Dr. Singh is in a ‘refresh mode’. Will the original reformer regain his reformist-tag? Surely, Dr. Singh, the Prime Minister, will love to relive the days of Dr. Singh the Finance Minister. Will the Reserve Bank of India endorse the ‘re-born reformist’ in Dr. Singh? Indeed, he faces the RBI trust vote on Monday, when the apex bank meets to review the monetary policy.