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The
phrase ''economic reforms'' means different things to different
people. To some, the phrase would include opening the country's
doors wider to foreign investment, lowering interest rates, value
added tax, expeditious privatisation and closer integration of the
Indian economy with the rest of the world. To others, these are
exactly the policy measures that are responsible for slow economic
development in the country, sharper inequality, higher unemployment
and widening regional imbalances.
The first point of view is frequently articulated
by upwardly-mobile representatives of chambers of commerce and industry
associations. Interestingly, the second viewpoint is enunciated
not just by Left ideologues, but also by individuals belonging to
right-wing organisations like the Swadeshi Jagaran Manch and the
Bharatiya Mazdoor Sangh, both of which are affiliated to the Rashtriya
Swayamsevak Sangh. Since the RSS also happens to be the ideological
parent of the BJP that leads the NDA government, internal tussles
within this fraternity find reflection in the flip-flops on economic
policy issues by the Atal Behari Vajpayee government.
The N.K. Singh committee had recommended that
the cap on FDI be increased in a host of industry segments, including
civil aviation and telecommunications. When the Cabinet met to discuss
this subject, fm Jaswant Singh reportedly met with unexpected resistance
from not just Civil Aviation Minister Shahnawaz Hussain and Telecom
and Disinvestment Minister Arun Shourie, but also from Deputy pm
L.K. Advani. Would anybody be interested in the country's aviation
industry at a time when the world's largest company of its kind,
American Airlines, had gone bankrupt and when Air India and Indian
Airlines had been removed from the list of public sector undertakings
to be disinvested?
Singh is keen to implement a new value added
tax regime that is considered to be far superior to the existing
sales tax regime. But his compatriots in the BJP have taken up cudgels
on behalf of certain traders who are dead against the implementation
of vat, simply because it would check widespread tax evasion. Sections
within the BJP also apprehend that vat may result in an inflationary
spurt in the short run that could spoil the party's electoral aspirations
later this year in states like Rajasthan, Madhya Pradesh, Delhi,
and Chhattisgarh.
The fm's intentions have also been opposed
by another of his Cabinet colleagues, Labour Minister Sahib Singh
Verma. At a time when almost all interest rates in the country are
ruling at their lowest levels in three decades, the board of trustees
of the Employees' Provident Fund organisation have staunchly resisted
lowering the interest rate on deposits from 9.5 per cent to 8 per
cent. Now it may make good economic sense to pare the interest rate
on such deposits, but such a move is unlikely to please the 36 million
EPF depositors and their leaders in the trade unions-certainly not
at a time when job opportunities in the organised sector are growing
at barely 1 per cent per annum and the ranks of the unemployed are
swelling. The founder of the BMS union and senior RSS leader Dattopant
Thengadi recently irked the BJP leadership when his public remarks
on India's position in the World Trade Organisation were interpreted
as a direct affront to pm Vajpayee. The RSS, however, stood by what
Thengadi had said when he compared those who were allegedly compromising
the country's economic sovereignty in the WTO to infamous traitors,
Mir Jafar and Jaichand.
The government was embarrassed when the BJP's
single-largest partner in the NDA, the Shiv Sena, joined hands with
the rest of the Opposition in the Lok Sabha to criticise the move
to privatise profit-making PSUs like Hindustan Petroleum and Bharat
Petroleum. Earlier, Shourie had been personally attacked in the
Rajya Sabha by Shiv Sena mp Sanjay Nirupam for the manner in which
the controlling interest in Centaur Hotel near Mumbai's Santa Cruz
airport had changed hands at a price that was 35 per cent higher
four months after the hotel had been privatised.
The short point is that while it may be very
fine to wax eloquent about the need for so-called economic reforms,
unless a political consensus can be arrived at, all such attempts
are bound to falter if not fail.
The author is Director, School of Convergence
at IMI, New Delhi, and a journalist.
He can be contacted at paranjoy@yahoo.com.
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