Most analysts missed the forest while commenting on the trees in Prime Minister Dr. Manmohan Singh'sinaugural address at the CII meeting. They also missed to connect this new socialist face of our reformist Prime Minister to what his colleague Mani Shankar Aiyar said at yet another CII meeting earlier. Now we know why Mani was not pulled up when he minced the economic reforms and declared at the top of his voice that it was the reforms that made him from a Leftist to a Marxist. It seems now the Prime Minister is also treading on a similar path?from reformist to socialist.
Dr. Montek Singh Ahluwalia, somewhat an alter ego of the Prime Minister says that Dr. Manmohan Singh read the greed Act to the industry captains because the theme of the CII meet was ?inclusive growth?. So the father of economic reforms now talks of industry dedicating to workers? welfare, extended affirmative action, warns against cartelisation, says employment growth is necessary to spread the benefits of high GDP growth rates, deprecates high profits, excessive management remunerations and vulgar display of wealth and ostentatious expenditures, calls for people investment and higher R&D and innovation investments, and slams corruption. He ends up with plea for industry promoting ?socially responsible media and finance socially responsible advertising?. Dr. Manmohan Singh thus completes his Ten Commandments and defines it as his ?social charter that is your (industry?s) obligation to society.? Industry applauds at the conclusion.
But by afternoon the same day, the mood changes. Grumbles are heard that economy'smain problems are pushed to the backstage and in any case, the gap between outlay and outcome is all of government'sown making and some of the commandments are just unworkable. The industry'sdoyen Ratan Tata pointed out that his business house has invested as much as Rs. 600 crores in corporate social responsibility projects around its manufacturing plants. He recalled how the House of Tatas founded the elite institutions of the country like Indian Institute of Science, Bangalore, Tata Institute of Fundamental Research, Tata Institute of Social Sciences and Tata Cancer Research Institute all in Mumbai, among others. The Government'sresponse to such socially responsible action of his House was to nationalise all of them! So, he felt that industry did not require sermons from the Government on CSR action.
Aside from the main speakers at the CII meet one heard much harsher comments on the PM'sspeech. Specific mention was about his call for industry promoting socially responsible media. Do politicians, those in the government and outside, set an example? And who will determine what is socially responsible? Dr. Singh'sI&B Minister openly says he would be the moral policeman for the media. Yet, UPA allies disturbed the entire budget session of Parliament with badgering the main opposition party on the Baroda incidents and fake encounter event, as if the controversial encounters and mass graves unearthed in J&K and elsewhere were not immoral enough!
On affirmative action, what is government including many in the opposition are doing? Turning what was essentially meant to be affirmative action into a vote bank-building plan, dividing the people into caste groups and setting communities against one another by applying unsustainable criteria for selecting the beneficiaries. The PM perhaps thought it prudent not to comment on the CII-ASSOCHAM'sjoint stand that they would reject any attempt to compel affirmative action by legislation and that all such action has to be within the framework of not tampering with the industry'scompetitiveness.
The very next day the CII'snew president Sunil Bharti Mittal told the media that the PM'sidea of restraints on CEO remuneration was not practicable. He pointed out that there was a huge scarcity of highly rated chief executives not just in India but also all over the world. For an economist like Dr. Singh to tell the industry to curb the CEO salaries was even otherwise, ironic. He should know that in an increasingly flatter world industry needed very talented executives and if Indian industry cannot afford them, they would move, including Indian executives, abroad.
Vodafone, the UK based European telecom giant, has an India born CEO, Arun Sarin. Captain Gopinath who founded the low cost airline Air Deccan, had to import a foreign chief executive for the company. Tata House that spawns an executive cadre and has top Indian executives for its many ventures had to get a foreign expert to run its telecom service Tata Teleservices. In such competitive environment how could industry say that it will not pay these executives what the markets demand? As Sunil Mittal says the situation in India and in the US are different in this respect.
The whole point about vulgar display of wealth and ostentatious consumption was missed in the PM'sspeech. He did mention the Indian tradition and a ?culture of saving and investment?. But he could have dwelt on the built-in factors in our culture like placing the mendicant rishis above the mightiest kings, about the tradition of karma yoga and of even the richest never making a display of their wealth. The Prime Minister perhaps must be afraid of his own brand of secularists who would have frowned upon him had he mentioned Kings like Janaka who lived a simple life.
He quoted Lord Keynes to bolster his plea for raising savings and investment instead of spending money. He need not have gone to that far for shining examples when the general culture in the country itself was for the wealthy to be parsimonious. There have been many old time business houses whose founders would live within a surprisingly small spend and invest the savings. Lord Keynes himself could have taken a few lessons from our Hindu ideal of simple living and high thinking, from the tradition of many Jain businessmen divesting themselves of their last rupee and going into vanaprastha etc. But that would have pitted him right away against the so called secularists who must find quotes from Marx or Max Weber at every turn while refusing to read either Kautilya or Vyasa.
The penultimate para of the PM'saddress was devoted to tell the industry that all this tremendous growth was the result of the conscious policies that were followed. He deftly avoided mentioning that these policies were followed for the last several years, not just during the three years of UPA regime. Knowing his economics as well as his right hand, Dr. Singh must have been constrained to admit that the nine per cent growth of the last two years and expected nine per cent growth this year all is built on the foundation laid in NDA regime. The poverty reduction in the years 1999-2005 is already well known.
Figures that CII put out show that rate of gross domestic savings and investment had been steadily climbing since 2001-02, the former rising from 24 per cent to 30 per cent in the last year of NDA'srule and then leveling off and again rising from 04-05 to reach 32 per cent plus in 05-06. The PM did not mention the success in the telecom business model; perhaps he felt that mentioning it would have reminded the audience of the success of the NDA in devising and implementing this model through the 1999 NTP. He also knows that agriculture continues to be Achilles Heel for the UPA government as well. Despite all the display of cheques being signed at public functions for farmers in distress, the farmer suicide stories are continuing. CII is saying linking farms to markets in a business like manner is the only solution to agriculture registering only two to three per cent growth when it should be four per cent at the minimum.
The PM should have dealt with the burning problem of setting up industries in the interior where farmers are resisting conversion of farmlands into industrial hubs. It is convenient to read a moral code to industry. For the politician that Dr. Manmohan Singh is slowly becoming, drumming up the moral code is one way of drowning the voices of protest at many places from Nandigram to Kalinganagar to Singur to Dadri. Significantly the ONLY state where the problem has been solved is Narendra Modi'sGujarat. But for the UPA Modi and his Gujarat are the red rags. They are practicing political untouchability to perfection after getting social untoucha-bility declared illegal and punishable.
Finally, Dr. Singh'scall to industry to ?make Bharat? runs aground when his own government'srecord is examined. At one place in the address he asked the industry to ?end for ever the debate? over India versus Bharat and then he says at the end that industry having benefited from India must ?make Bharat?. This contradiction apart, he fails to lay his finger on some of the key reform proposals that have run aground due to the UPA Government being led by its Leftist tail instead of the other way round. The entire GQ and North-South East-West expressway projects have come to a screeching halt, the government unable to solve the problems of logistics and law and order as well as extortious demands from overground babus and underground terrorist elements.
The power situation throughout India is becoming more and more critical with large parts of the country facing hours and hours of power cuts. The unhappy situation has as its leader Maharashtra, a state governed by the Congress for the last seven years. In the 10th Plan the NDA government hoped to add 40,000 MW of capacity. The UPA revised it to 32,000 MW and has ended with just 24,000 MW.
The core of the problem is generation and privatisation of distribution to create the surpluses needed for investment. However, the power sector reforms are on hold as the Left dictates the terms to the government. A plan like the telecom model could work wonders but UPA would rather forgo the benefits than mention an area of NDA success. As for the poor, Planning Commission estimates that some 60 per cent of the BPL families are out of the PDA fold.
The address to the CII was largely political. A Prime Minister whom his own party fails to put through the mill of a direct election to the Lok Sabha, now wants to acquire a ?progressive? face. So he puts on a socialist, pro-poor mask and reads out a poor man'sagenda to the industrialists. Thereby he hopes to polish his image as the father of economic reforms into a Marxist make over and keep company with cantankerous colleagues like Mani Shankar Aiyar while skirting the real problems facing the country. May be he was more anxious to please the likes of Prakash Karat and Bardhan with just two years to go before the next election by which time he knows the Congress would be ready to get the crown prince to don the Prime Ministerial mantle?that is, if the party could hope to come back.
(Writer can be contacted at [email protected])