Governance

Growth rate in the Indian economy, and whether the Government has given up on reform ..

For some time now, the Government has been facing trouble in trying to take policy decisions in the area of reform. For a quick history lesson, consider this: In the time period between 2004 and 2009, in the time when UPA-1 was in power, the Congress was in a minority, and depended on a number of parties for support, including the Left, and numerous other parties. Some of these extracted their own pound of flesh, while the Left refused to allow a lot of economic reform, but finally drew the line at the Indo-US nuclear accord. And then came the 2009 elections. In this election, the Congress got an enhanced majority, the BJP did not get much of support, and the Left sort of faded away. The PM made all sorts of announcements about reform, including 100 day targets.
And where are we now ? We have a Government that is in paralysis, where scams and the resultant outrage forcing investigations that are revealing corruption wherever the investigation has touched, leading to a Government, under a supposedly clean Prime Minister, that is known to be the most corrupt Government ever. The list of scams that have come out involve huge sums such as the 2G scam, the CWG scam, and so on. In addition, scams over property, coal allocations, satellite spectrum, and so on are promising a regular spate of problems to the Government. The BJP also is coming out to not be a party with a difference, since the experience in Karnataka is threatening to bestow a corruption tag onto the BJP that the party is not able to overcome.
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The coal scam – one round of outrage, the next when the CAG report comes ..

A few days back, there was a leakage of a report that was supposed to be a draft CAG report on the coal sector. If people were surprised at the number of zeroes outlined in the 2G scam, the coal scam as outlined in the draft CAG report was many times larger, figures that are huge and which also give a sharp reminder of the huge amount of money and benefits controlled by politicians. The report outlined a loss to the public exchequer through the process of granting coal mines to private sector companies, with the allocation of mines being done through the Ministry of Mining, which was also coincidentally one of the portfolios held by the Prime Minister during part of the time period mentioned in the report.
There was some amount of pressure, but then the Government showed portions of a letter from the CAG which quoted his despair at the report being leaked to the media before it was ready, and also that there might be changes in the report based on the ongoing discussion, with the current Minister of the department stating that there was no problem (at least in this particular case they did not blame the report on some policy decisions taken by the NDA Government). Of course, the next day the Times of India published the full text of the CAG letter to the Prime Minister, which sought to portray that the distress of the CAG was over the leakage of the draft report, and that the report did not drastically change from what was published in the draft report.
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A quick rollback of the Railway Budget – new minister Mukul Roy will toe Mamta’s line

This has been a very surprising and strange week in Indian politics. In today’s world, with coalition politics, you can see the pressure that the Prime Minister faces, and the PM has mentioned this a number of times already – with statements to the effect that the pressure of coalition politics puts pressure against taking hard decisions. Consider the current situation – the Congress party has had to back-pedal on many laws / policies that it believes is for the public good (or will project the Congress as a party of reform). Examples abound such as the Lokpal Bill, the National Counter Terrorism Center, FDI in retail, Pension Bill, etc. In many cases, the Congress has got support from the BJP for many reform oriented proposals, but the partners of the Congress would not allow these bills to be enacted (consider the case of the proposed Pension law, or some other reform laws).
It is now becoming clear that the Congress Government is reconciled with the fact that there will be only very gradual changes that it can make, with only populist measures being such that they will get support. You only have to see the case of the current Railway Budget. For many years now, the Railways has been seen to be a resource drain on the general budget, not able to generate revenue of its own (and even the acclaimed time of Laloo Prasad Yadav when the Railways was seen to have a surplus is derided as creative accounting); conditions in the Railways are pretty bad. Mamta Banerjee was the last minister who was presenting the Railway Budget, and she seemed to consider this as the Railway Budget for Bengal rather than for the country. The current situation was that the Railways has a pretty bad reputation in terms of the number of accidents that happen and where people die, where the condition of facilities at the train stations and in the trains is pretty bad, where the website of the Railways can be slow or non-working for days and nobody really seems to care, and so on. Food in even the prestigious Shatabdi is pretty bad, with days when the food is good being counted as a bonus.
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