A Bold Agenda for United Progressive Alliance (UPA)

Ref AlephNull #160

It is not a Common Minimum Program, it is the Lowest Common Denominator!

When Judge Carswell was rejected by the US Senate for the US Supreme Court on the basis that his judicial record was mediocre, Sen. Roman Hruska of Nebraska protested saying that mediocre people need representation too.

In India, it seems like stupidity needs more than its share of representation!

More from Rediff:

False debate on `India shining`

June 05, 2004


It is an old trait: lots of people actually like bad news, and they don`t treat the good news as a welcome development. Indeed, good news makes many people who run what one might call the ``bad news industry`` get very upset indeed.

Perhaps breastbeating gives some of us greater satisfaction than the thought of economic well-being. And so it is that if the National Sample Survey tells us that poverty increased in the reform years, a whole army jumps at it as proof that something terrible is going on in the name of reform.

If the NSS says the opposite, that poverty has come down, people think the government is fabricating the statistics. If the stock market drops 3 per cent of its value, the headlines are bigger than when the market climbs by the same percentage.

In the days when the advent of the Indian middle class was still a novel subject, anyone touting the thesis had to counter not just criticism but even hostility.

It is another facet of the same syndrome that makes it politically incorrect now to argue that India is in fact ``shining`` (to use the ad man`s phrase).

To make this claim does not mean that everyone in the country is having a good time, or that all our age old problems have been solved.

But it is fair to say that things are getting better, and as Mr Chidambaram is willing to testify, the economic situation that he has to handle is quite comfortable. But woe betide the old government for having said so. It deserved to lose the election for its effrontery.

The context here is the assumption by the Congress-led alliance that job growth in the reform era has been poor, that unemployment has grown and that something needs to be done about it.

In short, there is bad news and we need correctives. The correctives are spelt out in the ruling alliance`s Common Minimum Programme: employment guarantee programmes, possibly job reservation in the private sector, sticking with the existing labour laws (UPA`s short-hand being ``no hire and fire``), and so on.

Sunil Jain in his columns had punctured this whole ``bad news`` thesis. He pointed out that if job growth slowed in recent years, so did population growth -- and the wage trends do not suggest rising unemployment.

He also pointed out that job growth has been good in the manufacturing sector, which has seen reform; and poor in the agriculture sector, where there has been no reform.

He quoted both statistics and the experts to show that India has been missing the job growth opportunities that come with more foreign investment in labour-intensive export activity -- which China has capitalised on.

That India`s counter-productive policies in areas like weaving and infrastructure have prevented the growth of jobs in these sectors. Indeed, the Left-ruled states (and the Left is in the forefront of the jobs debate) have so far had slower job growth than more capitalist states like Gujarat.

Most of all, there is the bald truth that rapid growth by itself achieves quite a lot on the employment front. All of this could perhaps be short-handed to argue that there is precious little that is wrong with the reform programme, except that there hasn`t been enough of it.

This is certainly not to argue that there is no unemployment in India, but to suggest that the UPA`s understanding of this very important problem is defective and probably born out of the syndrome that makes people dislike good news.

The result is that it is barking up the wrong tree with its preferred solutions, when the old arguments of reformers probably hold more water: create a flexible labour market instead of trying to protect the high-wage islands, get rid of small-scale reservations so as to allow the growth of labour-intensive industries, reform agriculture and create the infrastructure to support rapid economic growth.

The reformers in the UPA government may have exactly these policies and objectives in mind, but they will be hamstrung by the assertions of the Common Minimum Programme. More`s the pity.

Well, Mr. Dost-Mittar, let us see how bold Mr. Manmohan Singh and Mr. Chidambaram get in the face of the loonies of the Left wing.

From Rediff:

The core problem for Chidambaram

June 05, 2004


It is hard not to feel a little sorry for P Chidambaram. He had to contend with a very odd set of cabinet colleagues during his tenure as finance minister in 1996. This time the colleagues are odder still.

Since government is largely about teamwork, it will be interesting to see how things turn out for him. Much will depend on the sort of support he gets from his prime minister. He didn`t get any last time.

Neither Deve Gowda nor Gujral -- how does it feel to have such men as your boss, I wonder -- understood what Mr Chidambaram was attempting. In fact, Gujral let him down badly over the manner in which the Fifth Pay Commission`s recommendations were to be implemented.

That may not happen this time but, really, how much prime ministerial support can he count on? This is the million-dollar question. No answer is available as yet.

P V Narasimha Rao recently said that he stood ``like a rock`` behind his finance minister, Manmohan Singh. If so, he must have been a rather shaky rock because within three months of becoming finance minister, in September 1991, Manmohan Singh resigned over the fertiliser subsidy issue. (Rao, however, had turned down his resignation).

The prime minister had failed to back him against two of his own cabinet colleagues, who would not support any increase at all. One of those is back now and remains as populist as ever.

Mr Chidambaram is made of sterner stuff and will not quit easily. But it will take all his will power to, as the Americans say, hang in there. One wishes him luck. He is going to need rather a lot of it.

Some of it has already come his way. His predecessor, Jaswant Singh, has left him in clover. Mr Chidambaram has been gracious enough to acknowledge this. But, as everyone knows, it takes very little time to run through legacies.

The forex reserves could begin to trickle away, especially if the external affairs minister continues to irritate the US with such single-minded devotion.

With the Left in full flow, strikes could happen. High oil prices could end low inflation. Mani Shankar Aiyar, the petroleum minister, has already said that the government is not going to raise the price of petrol, diesel, kerosene and LPG.

Political compulsions could increase revenue expenditure and therefore the revenue deficit. In fact, with divestment cancelled, this is certain. The only question now is by how much.

In coalition cabinets, as Yashwant Sinha discovered, disasters lurk behind every file, especially in the beginning when everyone is trying out for size. It takes supreme prime ministerial tact, guile and determination to remove the veto and the accompanying demand that everyone sports in his or her pocket.

Dr Singh and Mr Chidambaram will have to deal with several of these vetoers, often simultaneously. Sharad Pawar, Laloo Prasad, Ram Vilas Paswan, T R Baalu, Dayanidhi Maran are all members of the Cabinet Committee on Economic Affairs. And as only three members of the CCEA are from the Congress, they are in a majority.

Mr Vajpayee`s CCEA had 14 ministers, 9 of them from the BJP. That made a difference when it was sought which, in the beginning, was not often.

Jaswant Singh was very lucky. He came into the finance ministry towards the end of the NDA government. By then Mr Vajpayee was in full control. Manmohan Singh is not, at least not yet. With the No 10 factor, he may never be.

Whence the biggest similarity between this government and the NDA -- if Mr Vajpayee had to contend with the Sangh Parivar, Dr Singh and Mr Chidambaram will have to contend with ``The Parivar`` at No 10. This could become their main problem.

In this government, elements like Laloo will want the lion`s share of the extra spending, either for their own states or for increasing the subsidies that their ministries dole out. This is precisely where the prime minister`s support would be needed.

It would be very surprising if it was forthcoming in the measure required. He knows that a dog with a bone in its mouth doesn`t bark.

For the first three years, Mr Vajpayee also did not support his finance minister, who was left to twist slowly in the wind. The result of being thus abandoned was that Mr Sinha ended up doing a lot of damage to the economy -- mostly, he says, against his will.

In that sense, the NDA government and this one are almost identical. Amongst other things, they are the first ones where the finance minister is starting from a weaker position than his cabinet colleagues.

This is because of two reasons. One, in both, to start with the prime minister was not fully in control. And, two, the political weight of Mr Chidambaram is equal to that of Mr Sinha, somewhere around zero but not negative.

Taken together this adds up to a great structural weakness in this government. Never have the PM and the FM combined been as weak as this. That is why shoulders are drooping. You can forget about investment as long this weakness persists.

But it need not, as we saw in the NDA government. There are two ways out of the problem. One is that, in due course, the country gets a new prime minister. There was a time, around 2001, when the first almost happened in the NDA government.

Or, alternatively, the one in office succeeds in gaining full control as Mr Vajpayee did. He cleverly used the NDA allies against his opponents to do this. Will Manmohan Singh be able to do the same thing? If he does, it will be as big a surprise as his becoming prime minister.

But that is in the future. For the moment, the NDA legacy has given Mr Chidambaram considerable room for manoeuvre. Only one finance minister before this, V P Singh, enjoyed a similar luxury, albeit on a much smaller scale. And he was very effective as long as he had the prime minister`s support.

This means that Mr Chidambaram doesn`t have to do anything other than give a long winded speech. But he need not raise taxes or even try to cut subsidies this time. All he has to do is to simply re-present Jaswant`s Singh`s interim budget after attaching a few knobs and bells to it.

If nothing else, it will be consistent with the minimum part of the Common Minimum Programme.

harimou#162
The best answer can be summed up in an urdu verse:
ibtidaye ishq hai rota hai kya
aage aage dekhiye hota hai kya
Roughly translated, it means that it is just the start of the affair, wait and see what happens next!
As the article says, there are too many unknowns at the present time. We can revisit this subject in six months. I hope that both of us hope that I am right and you are wrong!