VAJPAYEE: RAJIV GANDHI II?

Another column on Atal Bihari Vajpayee, from Business World of 10 November 2003. I admired his good intentions and honesty, but was often frustrated by his errors.


How to blunder energetically

Incongruous as the comparison may seem, there is something in common between this Prime Minister and Rajiv Gandhi. When he was catapulted into power, Rajiv Gandhi was full of good intentions, which he pursued them with vigour. In the end he became ensnared in scandal and was defeated. But he was the Prime Minister who began the end of the licence raj.

Atal Behari Vajpayee came in with an equally towering ambition to change the face of India, and has pushed policies with just as much energy in the direction of reforms. With his half century of political experience, he has avoided the pitfalls that Rajiv fell into; if he retires at the end of term of this Parliament, he will be remembered as a well-intentioned, reformist Prime Minister.

The past fortnight saw his government taking important initiatives. Progress in Indo-Pak relations is measured in millimeters; but the flurry of proposals seeks to move matters quite a few millimeters forward. More important, it embodies a clever way of getting past the impasse. The deadlock arises from the fact that Pakistan wants action first on Kashmir – meaning progress towards India’s divestment of Kashmir – whereas India does not want it at all. The government has this time suggested a number of steps quite outside Pakistan’s agenda each of which is too small to bargain over. President Musharraf is a master tactician; he would love to have infructuous talks with India at the highest level, on the Agra model, and then claim India is intransigent and unreasonable. Our government has suggested measures that look so reasonable that they need no talks. Well done Vajpayee! That was a deft move.

The other steps look equally nimble, but are not. On the one hand, Vajpayee has traveled east and signed free trade agreements with ASEAN and Thailand. Regional trade agreements are a corrupt customs man’s delight, for he can draft complex rules of origin and then interpret them to his own satisfaction. Some duty-free imports will mean profits for importers, and customs officials will ask for a price to recognize that the goods came from ASEAN. As if that is not enough, the bureaucrats have built in enough complexity into the agreements to play further games. Tradable goods will be divided into three groups – early harvest track goods on which duties will be removed by 2007, normal track goods on which they will be removed by 2011, and sensitive track goods for which the date will be some time in the future. The 105 categories of sensitive goods specified in the agreement include such supremely trivial goods as carbon paper and non-electric typewriters. The rest can be manipulated by shuffling goods between normal and sensitive ones.

On the other hand, the government has decided to allow Thai Airways to fly to 18 airports in India, and private Indian airlines to fly to Colombo. Governments control the right of access to their airports, and trade landing rights. The government owns widespread landing rights for other countries which it gives only to the airlines under its own ownership, Air India and Indian Airlines; they can use only a fraction of the available landing rights. So the government has decided to allow Thai Airways to send more flights into India than reciprocity would permit. The calculation is that Thailand gets five times as many tourists as India, some of whom would filter into India in Thai Airways flights. But many more would come to India if reciprocity were abandoned and foreign airlines were allowed to bring in tourists whenever the tourists want to fly. That sounds unpatriotic; if Britain does not allow more Air India flights into Heathrow, why should we allow more British Airways or Virgin flights into Bombay? The reason is the same as the one used to give extra landing rights to Thai Airways: that people flying into India create jobs and incomes in India.

The same argument applies to private airlines flying to Colombo: why just Colombo? The country benefits equally from flights of Indian airlines whether they are owned by the government or private. It will benefit equally whether private airlines fly to Colombo, Dubai or Singapore. These are all airports to which the government airlines simply do not have the capacity to send enough flights; so why not allow private airlines to all destination?

For decades all patriotism resided in the government, and private businessmen were considered low-caste. Although the Rajiv Gandhi and Narasimha Rao governments began to weaken discrimination against the private sector, credit must go to the Vajpayee government for having brought the private sector into the mainstream. It is a pity, however, that when it frames policies, its thinking tends to be fractured and schizophrenic. Its heart is in the right place, but it needs a sharper brain.