Manmohan Singh’s one year: Not much to write about
It was India’s present Prime Minister, Manmohan Singh, who had in 1990-91 put the country on a reformist track. India’s first economic reforms were introduced under his Finance Ministership then.
But today, Singh has been the Prime Minister for 12 months and had done very little by way of reforms.
Singh unexpectedly became the Prime Minister in 2004 after Sonia Gandhi decided not to step in, choosing instead to remain the president of the Congress Party. The Congress – to which Singh also belonged – failed to secure an absolute majority in the 2004 general election, and needed the support of other parties to form the Government. Today, the Congress heads a coalition Government of many parties, including Communists.
Although Singh’s record as a reformer is beyond doubt, in fact, unimpeachable, his performance, along with his equally able Finance Minister, P. Chidambaram, is not up to expectation.
Barring a few exceptions, Singh’s Government has had a disappointing run. And India now needs to reform its economy especially so if it is to catch up, keep pace with and overtake China, which is currently the hot destination for foreign investors.
A noteworthy exception has been India’s tax reform. The country has just introduced Value Added Tax. Though some States are reluctant to implement this scheme, they will have to eventually. VAT will undoubtedly clean up the financial mess, widen the tax network by bringing in hundreds of thousands of those who played hide-and-seek with the Government by dodging tax payments and help further fill up the treasury.
The smaller exceptions have been a number of modest improvements in the system of caps on investment, which prevent foreigners from putting in much money and know-how as they would like into India's antiquated services and industries.
However, when it comes to payment of huge subsidies, often unwarranted, privatization and labour market reforms, the Singh Government has failed to achieve anything even remotely satisfactory.
A magazine article points out that “one sad consequence is that India has been slow to cash in on ending this year of restrictions on the trade in textiles. Because any company employing more than 100 people requires the permission of the State authorities to sack workers, few companies have dared expand to take advantage of increased demand. More flexible China, with a textile tradition less glorious than India's, has cleaned up at its expense.”
In all fairness to Singh, it must be said here that the blame for this slow or absence of reforms must be laid on his coalition partners, who have virtually tied his hands by insisting and getting through a common minimum programme. Which excludes most of the important reforms.
Yet, one analyst says that still Singh cannot be pardoned for having failed to see his dream reforms through. India’s Prime Minister has been labeled “too meek” or at least not strong enough to put the coalition partners in their places. After all, Singh is no politician in the strict sense of the term.
The same analyst concedes that a plus point in Singh’s favour is his character, which is decent and above corruption.
This has won him favourable notices outside India. His dignified style of functioning – in contrast to the hysterics of the earlier Bharatiya Janata Party – is being seen as an important element in repairing relations with Pakistan. There is every hope now that Singh will work out a great truce with Pakistan.
And here he has the full backing of the Congress president, Sonia Gandhi. There was fear that the two may not be able to get on: Gandhi, who relinquished the office of the Prime Minister in favour of Singh,and Singh, essentially a technocrat.
But that fear has remained unfounded. While Gandhi looks after the party affairs, Singh is fully in charge of the Government. This has provided a harmonious stability. The question now is, will Singh buck up with the reforms.
(Posted on this website on June 1 2005)