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M N Buch
Paralysis, petrifaction, incompetence!
Posted: Tuesday, 21 Aug 2012 at 1:20 PM
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BHOPAL

Less than two years ago when the world was still staggering under the load of severe economic recession, India was being cited as a fine example of continuous economic growth in a totally democratic environment. The country was being lauded for its economic management, banking system, and an optimistic corporate sector.

Suddenly towards the latter half of  2010 the economy began going to pieces following scandal after scandal: Commonwealth Games, 2G, illegal mining in Karnataka and Andhra Pradesh, falling output, and now Coalgate. A confident and strong rupee is down to Rs 56/ against the dollar. Suddenly the budget deficit has grown because of huge outlay on schemes like the National Rural Employment Guarantee Scheme NREGS,  pride of UPA-II. The government heeded none of the warnings from conservative economists and experienced administrators. They were brushed aside as anti-UPA.

What cannot be ignored is that India is governed by a fractious coalition whose leader, the Congress, has to do a balancing act to keep its disparate flock together. In UPA-I the Congress had to largely contend with the Left which behaved in a fairly responsible manner even after it quit the coalition over the Indo-US Nuclear Agreement.  In its second innings, the Left stood virtually wiped out. Taking its place were the irresponsible DMK and Trinamool. Others like Mulayam Singh Yadav and Mayawati also had to be humoured.

Earlier the BJP led NDA too had handled a fractious coalition. And in AB Vajpayee it had a leader with diplomatic skills which UPA leaders seem to lack. Therefore, despite a few compromises, the Vajpayee regime never totally lost control.  Which does not seem to be the case with the present government. This is despite the fact that corrupt leaders like Lalu Prasad Yadav have been marginalized. As things stand the credibility of the government has been severely hampered, and its working paralyzed.

Several factors are behind the malfunction. Topping the list is the National Advisory Council headed by UPA boss Sonia Gandhi who is also the Congress President. The NAC in many matters functions as a parallel government or at least the supreme policy making body. This is reminiscent of the Soviet Union where Stalin, secretary general of the communist party, was the de facto ruler, with the president and prime minister mere figureheads. There is uncertainty in UPA because nobody knows whether decisions even regarding trivial postings and transfers vest in Sonia Gandhi or the PM.  Obviously Sonia Gandhi is larger than life because on issues like Right to Education, Food Security, NREGS etc., it is NAC which calls the shots. Even the principal secretary to the PM, Pulok Chatterjee, is her choice. He has been with her ever since he was a young deputy secretary to the government. The PM does not even have the freedom to appoint his own personal staff.  Real power thus lies outside the PMO and the council of ministers. This is dangerous for parliamentary democracy.  Such an arrangement can only lead to ad hocism -- and paralysis.  

Consider the politics of coalition.  The magic figure for a majority in Parliament is 272, ie. one more than the half way mark.  If a party has approximately 182-200 seats it would have to collect anything between 75 and 100 additional supporters. This would be relatively easy because the smaller parties tend to go along with the party with the largest number of seats. In the 15th Lok Sabha, the Congress has 206 seats, about double that of the next largest party, the BJP.  In sharp contrast to UPA-1, where the largest single chunk of support for the Congress came from the Left Front, support for the Congress in UPA-2 is mixed.  

Things are different in the Rajya Sabha because the BJP has a substantial presence, and the UPA lacks a majority. This is one reason why the Lokpal Bill has been deadlocked. The Congress, in any case, never wanted it to be enacted. It is strange why the provisions of Article 108 of the Constitution were not invoked and a joint sitting of both Houses not arranged to enable passage of the Bill with a simple majority.

A few examples will suffice to show the extent of paralysis. In the allocation of 2G spectrum, the government decided that to encourage mobile telephony, the largest number of players possible would be invited to invest in the sector. Here entry was by invitation and the fees were fixed.  At that stage the telephone industry in India was in its infancy and mobile telephony was virtually unknown. When the field was thrown open, the flood of investors made India the fast growing mobile telephony country in the world. This naturally attracted more players and high value began to be attached to spectrum allocation for which there had initially been no takers. This is when the government should have taken a fresh look at its policy and switched from allocation by invitation on a fixed rate to a system of auction or tenders. Unfortunately, the DMK had claimed the lucrative communications ministry. That’s how A Raja happened.

The procedure in government is that in policy matters with financial implications, the Rules of Business of the executive government make it mandatory for the matter to be brought before the council of ministers for its decision. In the case of telecom A Raja avoided going to the cabinet, and on his own twisted the policy around, allotted spectrum at will, and at fixed rates. This caused enormous loss to government, estimated by the Comptroller and Auditor General (CAG) as being as high as Rs 1,76,000 crores.  Even if we accept this as speculative and grossly exaggerated, the fact is that Raja caused substantial loss through his arbitrary decisions.

The secretary of the ministry responsible for the proper implementation of the Rules of Business also failed in his duty by refusing to issue orders without a council decision. The PM was aware of what was going on but turned a blind eye. When the whole affair blew up in his face, the excuse trotted out was of helplessness in the face of coalition compulsions. A coalition which permits wholesale corruption and pleads coalition compulsions as an excuse is no coalition. It is only a collection of dishonest gangsters out to loot.  And a  PM who pleads helplessness under these circumstances can only be accused of paralysis.  

Another instance was that of the Railway Budget 2012-13. Here too the Trinamool and its leader, Mamata Banerjee, claimed the ministry as their jagir, and the PM, who alone is empowered to decide portfolios of ministers, acquiesced.  The minister, Dinesh Trivedi, presented the 2012-13 Railway budget to Parliament presumably after it had been cleared by the Council of Ministers. A furious Mamata immediately asked for his head and condemned the budget as unacceptable.  The PM readily succumbed, and Dinesh Trivedi had to go. His successor Mukul Roy rejected his ministry’s own budget and presented a new one. Where was the collective responsibility of the council of ministers which is mandated by Article 75 (3) of the Constitution?  Only a paralysed  party and government could have permitted it.  

Ever since UPA-II came to power there has been public outcry against increasing inflation and economic slowdown. India embarked on an ambitious scheme of guaranteed rural employment for which purpose the Mahatma Gandhi National Rural Employment Guarantee Act was passed and the National Rural Employment Guarantee Scheme was placed under it. The Act and the scheme have both emanated from the National Advisory Council.

The Act was intended as a demand based programme ie. if there was a demand for employment in rural areas, the government was required to provide 100 days of employment per family.  Unfortunately, it degenerated into a job creation programme in which creation of assets became secondary. Compare this with previous programmes like the Watershed Management Programme which had the creation of specific assets as the objective. Because they are rural assets, village employment was automatically created.  And because the asset was permanent the villagers had a commitment. Which is what made the programme a success, especially in drought prone areas.  NREGA only aims at putting 100 days wages into the pocket of a villager without necessarily creating assets.  It is a muster based programme and no muster based programme can be run honestly in India.  

Another reason for inflation is subsidies. The Madhya Pradesh government is guaranteeing 100 per cent purchase of wheat from farmers at a rate which is Rs 350 per quintal more than the prevailing market rate. Is this subsidy really needed? Almost every state gives subsidised electricity to villagers who demand guaranteed supply more than subsidy.  Gujarat is possibly the only state where rural power supply is guaranteed, and paid for. The Gujarat Electricity Board is flush with funds because people pay, the system is properly maintained and enlarged so that the quality of power is constant and both villagers and government have benefited.  

Where subsidies are really necessary is for the starving. To that extent the schemes of cheap grain introduced by Tamil Nadu and Andhra Pradesh are examples of properly applied subsidies. Free power is an example of a subsidy being wasted.  Misplaced populism has wrecked governance. Missing is the holistic view taken by people who understand the country, budgeting, needs of the average citizen and the economics of subsidy as against full payment for a beneficial service.


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