food for thought, india ceo forum attended by me in 2005

THE INDIA CEO FORUM

EXECUTIVE BRIEFING: Politics & Economy

July 27, 2005

The Common Minimum Programme? The Edifice of a Lost Opportunity A blunder gravely detrimental to national interest that any Government can commit would be to believe in its own propaganda. The UPA government, mostly, and the National Advisory Council, at all times, believe that the mandate to govern is along terms of references carefully encapsulated in the Common Minimum Programme (CMP). This is a fallacy.

The Congress Party with its inconsistent allies formed a government along through a wobbly coalition called the United Progressive Alliance. The coalition sought support from powerful communist parties and together they agreed on a certain course articulated in a 24-page document. The CMP lays down the guidelines that continue to dictate the policy formulation process in areas as inconspicuous as a sale of some token equity in a government-owned company, to more considerable issues such as the extent of strategic partnerships with global powers like the United States. To seek communist support, the Congress bit the bait, gave in too much and made silly commitments to huge spends in social welfare programmes. Nobody seemed to have questioned then as to where the money was going to come from and even knowledgeable economists seemed to have forgotten that India runs a serious fiscal deficit and a large national dis-saving. The hurry to cobble together a government seemed more imperative than economic logic or, crucially, long term national interest.

Government officials and politicians must make up their minds as to the premise on which they intend to determine the country?s destiny. It’s really a matter of making simple choices.

In the first instance there is the free market way to go, something that was introduced in 1991 when Dr Manmohan Singh was Finance Minister and subsequently reinforced in fits and starts by the BJP led government that followed. The second option is government financed development, a concept hammered away at for four decades. Most observers of the economy would concede that successive governments in the 1960s through to the 1980s tried this tack and failed miserably. It was such failure that motivated the first option which subscribes to the hypothesis of less government intervention and allows the free markets to take their own course. The simple premise is that if the economy grows, jobs and hence national wealth would be created automatically.

The people of India never voted for the CMP as the Congress now seems to mistakenly interpret. They voted for better governance. The BJP lost its claim to power when its allies mis-performed (AIDMK in Tamil Nadu; Telegu Desam in Andhra) and the party itself lost some of its charm in those states where it professed a natural advantage. People in India altered their previous voting patterns after BJP mismanaged Gujarat and its Central ministers changed its character, became arrogant and sometimes corrupt. For the Congress to think it has a solemn duty solely to “protect the poor” at the cost of national growth is shortsighted.

Several decades of Congress Governments subscribed to the “alleviate poverty slogan” and to policies which held India back. Other Asian countries that opened their economies, privatised and offered better governance made rapid strides. Many of these are no longer branded as “Third-World”. Despite the dreams of an emerging super-power, India remains entrenched precisely in those clutches.

I M A

The Prime Minister Dr Manmohan Singh has served his entire career in government. He understands, better than anyone, those policies that are possible for implementation and those that are a sheer waste of precious resource. Sadly, others in the National Advisory Council, staffed largely by left-thinking NGOs do not know better. What they want will take India back to the thresholds of socialism through retrograde and failed policies. Sadly, Dr Singh seems to find it hard to convince his political masters within the Congress Party.

The CMP is nothing more than propaganda created for political compromise. It cannot become the biblical reference that directs the governance of a country. The pressure of the communists amounts to blackmail where a minute section of the political community temporarily blessed with disproportionate power is exercising it to the hilt, much to the detriment of our country and to its long term opportunity. Surely, it is time that the Congress leadership recognises this. The so-called ideologues of the Left that continue to subscribe to failed paradigms are few in number but clearly powerful. All their socialist beliefs seem right for application at the federal level where they can experiment. But in West Bengal, a province they govern, a well grounded and practical Chief Minister continues to make corrective decisions seeking to reverse the outflow of investment, forced upon the region by decades of bad policies and misrule.

The CMP was not the basis of winning elections. Indeed, the Congress technically does not in itself have the mandate of the people. 146 seats in parliament cannot qualify for that privilege. The Left, ideologically apart in every respect, has a lesser claim. Coming together does not give them any more legitimacy. It is quite wrong for the Congress to be continuously bullied by the Left, just as it is wrong for the Left to differentiate in policies they choose to adopt in West Bengal versus the rest of the nation. If they feel that the development of Bengal is important enough to shed some of their dated beliefs, then surely they should feel the same, for the country at large.

It seems so very unfair that India has to compromise on its growth potential. Dr Singh possibly realises this but is unable to do very much. Several of his peers in the Party mistakenly believe that government controls and even badly directly government spending are essential for winning votes and in a way actually reinforce the communist position. They believe in their own propaganda and thrust it upon others as a sacred document called the CMP. Now is that not a blunder?