Tuesday, July 16, 2013

Policy aggression replaces policy paralysis….

Over the last year since Chidambaram took over the Finance Ministry, we have seen a spurt in policy aggression. Starting with the big bang reforms of September last year – which cost the UPA the support of the TMC – Chidambaram and the PM have continued with the thrust since then. The latest decisions announced yesterday should be seen as a continuance of this thrust. If policy paralysis was the bane of the Congress earlier, policy aggression is surely the talking point of today!

Who could have believed that the government (any government for that matter) could have opened up the defence sector this aggressively. Now, if the technology being used is state of the art, the FDI in this sector can go up to 49%. Ditto in telecom, where the FDI limit has been upped to 100%. If Bharti Airtel can go global and acquire a major footprint in Africa, why should we not allow the reverse as well? Ditto with the erstwhile holy cows – insurance and pension funds – where the government has reiterated its stance by promising to increase FDI to 49%. For this it needs the backing of the BJP; so now that party will get a chance to show where it stands again. Even more importantly perhaps, the government has simplified the process of attracting FDI, by making approvals in eight sectors (petroleum refining, commodity exchanges, power exchanges, stock exchanges, even single brand retail) “automatic”, not requiring the clearance of the slow-like-a-turtle FIPB.

What will the BJP do? On the one hand, it has nearly decided on making the self-proclaimed-development-champion Narendra Modi as its PM candidate. On the other hand, it has been doing everything possible to block development and reforms. It has repeated disrupted Parliament, for the flimsiest of reasons. It has repeatedly blocked the policy initiatives of the government. In insurance and pension, it has been opposing the opening up of the sector. This is bizarre, because the reputation the party had earned during its own period of rule was that of being a right-of-center party. What changed suddenly? Why does it oppose everything now? (Of course we do know how wise the party is when it says that the job of the opposition is to oppose!).

The BJP likewise opposed FDI in multi-brand retail, showing it wants to protect the baniyas. Anyone who has seen the steps taken by the Maharashtra government to stop the loot of the food baniyas knows exactly what these baniyas are capable of. As per a report in the TOI, food retailers in Maharashtra were pocketing an abnormally high profit of Rs 60 lacs per veggie per day (http://tinyurl.com/pvny2eg). These baniyas were charging as much as four times the price paid to the farmer. They were the rogues responsible for the retail food inflation. They were also responsible for fleecing the farmer. Does the BJP want to support such people? The BJP’s disdain for farmers is well known – during its rule, the Minimum Support Price (MSP) for wheat, rice and other staples rose just a pittance. In contrast, the present government has been far more generous.

So will the BJP continue with its opposition to what is decidedly policy aggression of the Congress, and risk being accused of disrupting India’s growth story? Already, its vociferous resistance to, and the threat of reversing when it came to power, the FDI policy in multi-brand retail, has led to foreign retailers waiting out. If it now continues to block FDI in other sectors, it will be blocking FDI as well as job creation. It will also have no reply to give to the people who desperately want reforms. Today’s Hindu has this “exclusive” revelation from the latest NSSO data. Poverty level reduced in the country by 15% (from 37% to 22% - a fall of more than 40%) since 2004-5. This has happened solely because of the reforms pursued by this government. Does the BJP want to oppose measure to alleviate poverty?

When one puts the BJP’s opposition to reforms alongside Modi’s zeal for big-ticket projects in his state, one gets the impression that the BJP supports only big businesses. It can give land to Maruti, GM and Tata at cheap rates to bring them to Gujarat, but it cannot empower the smaller guys to grow their business by getting foreign partners. It can see Kishore Biyani, Mukesh Ambani and Kumar Mangalam Birla get bigger and bigger in retail, but it cannot see Walmart and Carrefour come in. Is this the core of the BJP’s economic policy? Support the local moneybags and protect them from competition? Do they fund the party’s electoral campaigns?

Returning to the government, I think the Congress is looking recharged. Maybe the BJP’s projection of Narendra Modi has brought vitality back to the party! It nows sees an opponent who it can beat. It sees one who is immature, trying to replicate the success of one state over the entire country. One who travels only to the big cities, and has no clue about “real India”. One who panders to the “khaas aadmi” rather than an “aam aadmi”. One who can be brought to his knees by only releasing the correct statistics, once he has gone about spreading the wrong ones. One who believes in aggregating audiences on twitter (even though they are fake ones) rather than in the real world. The Congress feels more relaxed about its chances in 2014 now! And this has given it the confidence.

The real truth is that the Congress has covered a lot of ground since the period of paralysis. It has finally fought back its attackers – the CAG and the BJP working in tandem. There are still 9 months to go for the elections. Policy paralysis will long be forgotten by then….

No comments:

Post a Comment