[In 1999, the Bharatiya Janata Party has just formed government, and was brimming with ideas, good and bad. This column from Business Standard of 8 October tried to temper its excesses.]
Making the best of good luck
The
Bharatiya Janata Party left office with much bitterness. It blamed fate for
having lost power on account of one vote; it blamed the Congress for having
pulled it down, and it thought that its performance in government had been
poorly rewarded. All this bitterness can now be put behind. The gods have
smiled on the Party. Its alliance has a solid majority. The Congress could not
dream of pulling it down. It may still be vulnerable to a revolt from a constituent
of the alliance. But only the Telugu Desam, Janata Dal and Shiv Sena have the
numbers to cause serious trouble, and none of them is quite capricious enough
to cause serious misgivings. The Prime Minister can now get down to the
business of governing.
As luck
would have it, the economy is also looking in good shape. Inflation is at a
20-year low. Industrial growth is looking up. After two years of stagnation,
exports are rising again. These are early days of good news, and it may be too
soon to start counting its blessings, but the government can afford to be more
relaxed about the economy.
The last
government had an ambitious finance secretary in Vijay Kelkar. He had planned
to bring out a paper together with the February budget outlining a set of
second-generation reforms. I had then suggested that the BJP government was
short of good news. The budget was going to bring good news; if the Finance
Minister presented the reform plans together with it, he would be wasting an
opportunity. He would do better to present the reforms paper at the end of the
budget session. That way he would be spreading out the good news; and he would
be able to incorporate the fallout of the budget in the design of the reforms.
But luck
was not with Vijay. The government fell in the meanwhile. The BJP toyed for a
while with the idea of presenting the reforms proposal as a first instalment of
the election manifesto. But doing so would have reopened the rift between the
liberals and the swadeshi backwoodsmen in the party, so the paper was put off.
In the meanwhile, Vijay was removed. Now, for the first time since 1991, there
is no economist worth the name in the finance ministry. The reforms proposals
will be announced with fanfare. But the BJP’s problem has been that it has no
one who can judge what is a reform and what is not, or what is important and
what is not. So its reforms are in danger of being the kind of mishmash that
CII and FICCI nowadays put out – a mixture of the high-sounding, well-meaning,
self-serving proposals that are sound only by accident.
I also
think that some realism is necessary about what this government is and is not
capable of. Vajpayee’s political acumen can only be admired. His party did not
make things easy for him. Kushabhau Thakre served capably as a loose cannon.
The swadeshi lobby provided the mob. In the sombre days of last winter, it
looked as if the enemies within the BJP would do it more damage than the
enemies without. However, doctrines do not win elections; moderation does. And
Vajpayee is the only leader in the BJP who makes moderation his leitmotiv. He
firmly told the Hindu extremists to leave him free to govern; after a
determined fight he won. Now, having won the election as well, he has won
freedom of manoeuvre which he must use.
At the same
time, it must be admitted that Vajpayee is not a master of detail. Recall his
forays into foreign policy – his precipitate return when China invaded Vietnam
in 1978, his intemperate reaction to Mandela’s well meaning speech last year.
Consider even the telecommunications policy on which he has set his heart; what
a mess it remains to this day, despite the removal of Jag Mohan! Studying
something thoroughly, getting one’s teeth into it, fine-tuning a document –
these are not Vajpayee’s strong points. He is best at reaching a balanced
judgment and setting a direction.
I think
this implies that he should pick a few issues where a major direction-setting
exercise is required. In terms of his interests, of his express concerns, three
are paramount, namely foreign policy, public enterprise policy, and
constitutional reform.
In foreign
policy, the Pokhran ceremony made a break with Nehruvian humbug and blew India
into uncharted waters. Jaswant Singh has tried bravely to navigate, but
something handicaps him. It may be his great country complex; whatever he might
tell Karl Inderfurth, India is not a great country. Its share of world trade is
0.6 per cent. Its share of world foreign investment flows is even lower.
This means
three things. First, India must increase its presence in the world economy; and
that means that the Indian economy must be opened up further. This may be
unwelcome to the BJP rank and file and to truly indigenous Indian businessmen;
but the way to make the world take India seriously is not by making serious
speeches to foreign dignitaries, but by tripling our imports and finding a home
in the country for $25 billion of foreign investment. It is not as drastic as
it sounds, for imports cannot be tripled without tripling exports, and foreign
investment will not find any use unless it goes into export production. But
once this is seen as the path to the greatness that the BJP seeks, its
implications follow – not only for import duties and advance licensing, but
also for WTO, our relationship with the US, and telecommunication and power
licensing. Foreign policy has implications for domestic policies in many areas
that the BJP needs to face up to – and that Vajpayee must coordinate.
Second,
Jaswant Singh’s approach of mending fences with the US and forgetting the rest
must be abandoned. Vajpayee has the correct perspective of seeking closer
relations with neighbouring countries. I was nauseated by Kapil Sibal’s finding
scams in imports of sugar, edible oil and whatever else; he is a party colleague
of Manmohan Singh, who should have told him that cheaper imports of mass
consumer goods, whatever their source, make the common people better off. I
think that Vajpayee was right to try out the Lahore overture, despite what
happened later. Eventually India and Pakistan will have to make peace, and that
peace will be easier to make if its leaders know one another personally.
Vajpayee was also right to promise duty reductions to Bangladesh and Sri Lanka;
I only wish he applied himself enough to stop the commerce ministry from
sabotaging his initiatives. But the point is broader; we must seek closer
relations not only with our south Asian neighbours, but with all our neighbours
across the Indian Ocean; and the easiest way of building up relationships is to
provide a large and secure market for their production in our country. If we
were more closely integrated with the Indian Ocean countries, the world would
begin to see us as a regional node instead of the insignificant India.
Finally –
and this follows from the first two points – foreign policy involves not just
politics, but also economics, society and science. We cannot attract students
from abroad if the home ministry continues its vexatious restrictions; the
elite of neighbouring countries will not come to India unless we allow them to
invest in our stock markets. Thus a liberal stamp must be imprinted on all our
policies, whichever ministry they are the concern of. This is where the PMO is
crucial; this is where Vajpayee must exercise authority.
The BJP prides
itself on having dared mention privatization; but hitherto its contribution has
been just a word. It is scared of provoking massive strikes of organized public
sector workers if it goes any further. So it has continued with the approach
initiated by Manmohan Singh seven years ago of selling public enterprise shares
without parting with control. However, seven years have passed; the successful
public enterprises, such as ICPL, BHEL or SAIL are now handicapped rather than
helped by government ownership. Their trade unions will welcome it if the
government loosens its stranglehold. The government should forget its obsession
with disinvestments as a money raising device. It should give profit-making
enterprises the freedom to issue shares whenever they like, provided they do it
through a public, transparent process. When they do, the government should make
a commercial decision whether it wants to buy any of those shares or whether it
wants to use the issue to unload some of its own shares.
It is the
bankrupt enterprises that pose the problem, and that problem will not be solved
until the workers are separated from the assets. The only peaceful way is to
pension off the workers by giving them a certain number of years’ salary. Once
an enterprise is divested of its workers, rational decisions about what to do
with its assets are easy.
On
constitutional reform, the BJP swarms with stupid ideas like banning Sonia
Gandhi from fighting elections. But the reality is that no constitutional
changes are possible without the cooperation of the Congress, whereas if the
NDA and the Congress agree, almost any constitutional reform can be passed. And
it is in the interests of the Congress as well as the BJP to move the
Constitution so as to facilitate a two-party system. My preferred solution is a
changeover to list-based proportional representation with a cut-off point of 25
per cent. Other options can be thought of. The important thing, however, is to
start thinking of big changes – and to bring them about in cooperation with,
not in conflict with the major political formations. This is the task for which
only Atal Behari Vajpayee is qualified.
