I am not a lame duck prime minister," said Manmohan Singh in his meeting with a group of editors on June 29. Any prime minister who has to stress that he is not lame cannot be very healthy.
In any case, Manmohan is presiding over a limping government crippled by allegations of corruption and paralysed by infighting, between party and Government and between ministers in the Cabinet. This is a dramatic and drastic fall from the summer of 2009, when the Congress stunned opponents and astonished friends by picking up 206 seats. The party dreamt of attaining the magic number of 272 five years on. But the Congress has squandered its mandate. The crisis in the Government is so acute that the Prime Minister who has rarely spoken in public in the last six months-making him the butt of numerous jokes-announced on June 28 that he would meet the press frequently, possibly every week. It may, however, be too late for mere words of assurance to bring the Government out of its coma.
INFLATION RISES, GOVERNANCE STALLS
Nowhere is Government paralysis more visible than in the mismanagement of inflation. The Government has seemed short on ideas. In January, the Prime Minister set up an inter-ministerial group on inflation to examine all aspects of the problem and suggest remedies. An inter-ministerial group is effectively a third-tier body, ranking below the Cabinet Committee on Prices and the Committee of Secretaries. To match its relatively low place in the hierarchy, it is chaired by the relatively lightweight (in administrative terms) Chief Economic Adviser Kaushik Basu. While some of the members of the committee are secretaries of important departments such as the Planning Commission, agriculture ministry, food ministry and commerce ministry, the Prime Minister's Office (PMO) is only represented by an official of the rank of joint secretary.
The group has met once a month on average over the last six months. According to sources, all it has done is talk. At one meeting, Future Group Chairman Kishore Biyani was invited to pitch for multi-brand retail as a means to combat food inflation. At another, RBI Governor D. Subbarao was blunt in his assessment that inflation would continue to rise until October.
The inter-ministerial group issued two suggestions on food inflation in June: first, to allow FDI in multi-brand retail to bridge the enormous gap between farm-gate prices and retail prices by eliminating the large number of intermediaries and their respective commissions in the supply chain; second, to amend the Agriculture Produce Marketing Committee (APMC) Act which in its current form hobbles competition in wholesale trade. Neither of these suggestions is novel. Finance Minister Pranab Mukherjee's Budget speech in February 2011 had suggested the need to amend the APMC Act. Mukherjee's Economic Survey in 2009 had made a strong pitch for FDI in retail.
The inter-ministerial group has spent six months reinventing the wheel. Says a member, "Surely, the Government did not expect us to tell them what they didn't already know." The two suggestions made by the Basu-led group will now go to the Committee of Secretaries which will deliberate on them before sending it to the Cabinet Committee on Prices. The Cabinet Committee may then choose to refer the suggestions to the full Cabinet. All that will take many more weeks at the very least. As for inflation, it has gone up from 8 per cent to 10 per cent.
ROTTEN POLITICS, ROTTING GRAIN
The Government's economic mismanagement has spilled over to take a toll on a constituency that helped reelect the Congress-the farmers. By January, the Government was aware that it would be a bumper wheat crop this year. Yet, it failed to lift a ban on wheat exports. According to the Food Corporation of India (FCI), the Government has, as of June, a stock of 65 million tonnes of wheat while it has a storage capacity of just 62 million tonnes. Of that, only 57 million tonnes can be stored in covered areas. The monsoon has set in over much of the country and eight million tonnes of stored, uncovered wheat will almost certainly rot. The Government has invested little in increasing FCI's storage capacity.
The Government's view on wheat exports is sharply divided. For almost six months, Agriculture Minister Sharad Pawar and Commerce Minister Anand Sharma have been arguing in favour of allowing wheat exports at the EGoM headed by Pranab Mukherjee. Their arguments are twofold: prevent unnecessary waste and allow the farmers to get a better price by selling abroad. The finance minister, as chairman of the EGoM, has been reluctant to yield ground fearing an impact on inflation if exports are allowed. Incidentally, the contribution of cereals, still available in abundant quantities, to food inflation is minimal. The prices of vegetables, fruits, meats, eggs and milk are rising the fastest because of acute supply shortages. Mukherjee has an ally in Food Minister K.V. Thomas, who is against allowing exports. He fears that there may not be enough grain to supply the people covered under the proposed Food Security Act. Eager to please National Advisory Council Chairperson Sonia Gandhi, Thomas seems to have forgotten that the Food Security Bill is not even close to being passed by Parliament. Says a senior official, "We can't hold this crop until the Food Security Bill is eventually passed. By then a lot of it will be destroyed." Last week, Thomas indicated that he may be willing to allow 'some' exports.
POWER STRUGGLES, POWER CUTS
Manmohan Singh made energy security one of the central issues of his Government. He even pushed the Indo-US nuclear deal against stiff opposition, and to the peril of his Government, to achieve this end. However, little action has been taken by his Government to actually ramp up power generation. On the contrary, squabbling ministers have ensured that the country is unable to fully generate even the current installed capacity. Sixty per cent of India's power needs are met through coal-based thermal power generation. The country is suffering from an acute shortage of coal and severe power cuts. The current shortage of coal is 100 million tonnes, expected to double in the next five years. With additional mining, the shortage can be bridged locally.
Environment Minister Jairam Ramesh's decision to designate large tracts of forest land, which are estimated to hold coal reserves of more than 600 million tones, as no-go areas for mining has put a spanner in the works. His decision is being bitterly opposed by Coal Minister Sriprakash Jaiswal and Power Minister Sushil Shinde. Says a senior bureaucrat, "We can find middle ground, but Ramesh thinks he's king and Jaiswal has dug into his corner. Shinde only intervenes intermittently. The prime minister is absent."
The issue was referred to a 12-member GoM under the chairmanship of Mukherjee in January 2011. Six months later, on June 9, the GoM, unable to reach any consensus, chose to adopt the prime minister's preferred formula for delay: an expert committee to further advise the GoM. The committee is to be headed by member, Planning Commission, B.K. Chaturvedi and will have the environment secretary, coal secretary, power secretary and finance secretary as members. The committee has been given six weeks to submit its report. Officials are not optimistic about a decision.
JAIL WITHOUT BAIL, PASS THE BUCK
Ministers have begun to increasingly lean on their bureaucrats to take major decisions. The bureaucracy is in no mood to step up to the task. The Government's desperate and clumsy attempts to cleanse the stain of corruption are making bureaucrats nervous. Officials fear a witch-hunt.
Says an official, "Even a bona fide decision can be subject to investigation by the CVC, CAG or CBI. We have already heard of cases of the CBI questioning some public sector undertaking chiefs." Another major worry is the prospect of being sent to prison with no chance of securing bail even when not guilty of any offence. Many bureaucrats are particularly concerned about the treatment being meted out to their former colleague, Siddharth Behura, who has been incarcerated in Delhi's Tihar Jail for two months now. Says another official, "It's better not to take any decision. Just refer it to somebody higher up in the hierarchy." The buck stops somewhere. At this point, few in the bureaucracy want it to stop at their desk. Who pays for the absence of governance? The common man.
DELAYED DECISIONS, SHAKY INVESTORS
Investors, both domestic and foreign, are jittery over the Government's indecision. The inordinate delay in giving approval to the highprofile $9.6-billion takeover of Cairn India has sent a bad signal. The deal has been stalled since September 2010. In the last week of May, a GoM headed by Mukherjee reportedly agreed to grant approval to the Cairn-Vedanta deal without setting the kind of difficult and, according to some, unfair pre-conditions that former petroleum minister Murli Deora had wanted imposed. The findings of the GoM were sent to the Cabinet Committee on Economic Affairs (CCEA) for a final decision. At the end of the GoM meeting, Petroleum Minister S. Jaipal Reddy said that he expected the CCEA to announce a decision in two weeks. Four weeks later, at the time of writing, the fate of the Cairn-Vedanta deal remains uncertain.
Unsurprisingly perhaps, foreign direct investment in the first six months of the year is just one-third the amount received in the first six months of 2010. Incredibly, Pakistan has received more money from foreign institutional investors than India has in the last six months. India's stock markets, in the first half of the year, are the worst performing among the BRIC (Brazil, Russia, India and China) nations. Economic growth for the January-March quarter in 2011 was marginally below 8 per cent. A Business Confidence Survey conducted by our sister magazine, Business Today, with market research agency Cfore (forthcoming issue July 6) shows a sharp decline in business confidence in the April-June quarter compared with the quarter between January and March. A weak macroeconomy characterised by high inflation and stalling growth rates is clearly worrying businesspersons. The "certainty" of 8 per cent growth, UPA's proudest achievement, is under threat.
Says a senior bureaucrat, summing up the state of policymaking in the Government, "The situation is like India batting at 35 for 9 in a cricket match. We just hope that someone puts us out of our misery quickly. We want to see a new team walk in to bat."
SABOTAGE MANMOHAN SINGH, PROP UP RAHUL GANDHI
The biggest opposition to the prime minister is not from the BJP or the Left but from powerful leaders of his own party who want him replaced by Rahul Gandhi. Said Congress General Secretary Digvijaya Singh, "I would very much like to see Rahul Gandhi become prime minister." According to a Congress Cabinet minister, a PMO official took up this matter with Sonia's political secretary, Ahmed Patel. Digivijaya soon issued a clarification saying that what he meant was, "I would have liked to see Rahul Gandhi becoming prime minister during my lifetime. I have no intention of undermining Manmohan Singh's authority as prime minister." The mea culpa had a perfunctory ring to it. At around the same time, party spokesperson Jayanthi Natarajan, speaking in a television debate, referred to Manmohan's prime ministership as an "experiment". She quickly retracted saying it was a slip.
The medium can sometimes be more important than the message. Digvijaya is not a mere general secretary, but a key aide of Sonia and Rahul. When he speaks, his colleagues take it as the voice of 'The Family'. This is not the first time Manmohan's credibility has been undermined by his colleagues. During the 2G scam, even as the prime minister stated that he had no hesitation in appearing before a JPC, Congressmen initiated a whisper campaign that this was not the case. The media was inundated with "unsourced" theories about how Manmohan was scarred by an earlier JPC appearance during the Harshad Mehta securities scam as the then finance minister, and did not want a repeat. Similarly, during the botched P.J. Thomas affair, the party quickly distanced itself, claiming that this was purely a government decision. In the absence of strong leadership, discipline in the Cabinet has collapsed. Two senior ministers in Manmohan's Cabinet are engaged in a no-holds-barred battle of oneupmanship. The raison d'etre for their rivalry: both want Manmohan's job. In his meeting with editors, the prime minister dismissed talk of any personal rift between his two most senior ministers. But the adhesive incident has stuck. Yet, no one has demanded an enquiry or investigation. Then, there is the fable of the 'neverready' Rahul. Leave aside prime ministership, the Congress party's heir apparent has let it be known that he is not even interested in joining the Cabinet. In fact, when he is not trekking in Leh, holidaying in Kodagu or travelling to Europe and Dubai, he parachutes in and out of Uttar Pradesh. Those who claim to know him say that his focus is reviving the party in Uttar Pradesh. The rest of India will just have to wait.
In the meantime, Manmohan is a prime minister in limbo. Six months ago, he promised a radical Cabinet reshuffle. There was nothing radical about the few changes he made. Privately, he says he wants to weed out non-performers such as Veerappa Moily, S.M. Krishna, Vilasrao Deshmukh, C.P. Joshi, Kantilal Bhuria, B.K. Handique, Murli Deora and S. Jaipal Reddy. But will he be allowed the reshuffle he wants? It's Lutyens Delhi's worst kept secret that a Cabinet reshuffle is decided by Manmohan, Sonia, Ahmed Patel and Rahul. Of these, the prime minister's voice carries the least weight.
An uncertain prime minister has postponed the monsoon session of Parliament by two weeks, an unprecedented move. When Parliament does convene, he will find it difficult to push through legislation. There is still no agreement on the Lokpal Bill between the representatives of the Government and civil society after a series of meetings. Anna Hazare has threatened another fast, beginning August 16. But Hazare may not be the Government's most serious problem in civil society. That particular thorn in the Government's flesh comes in the form of the Sonia-headed National Advisory Council (NAC). Most of the UPA's key legislations-most importantly the long-pending Food Security Act-are stuck because of differences in opinion between the Government and the NAC (see Bill of Wrongs), or because of opposition from allies, as in the case of the Land Acquisition Bill (strongly opposed by Mamata Banerjee). The prognosis for governance in the near term looks bleak. This is already having serious political consequences for the Congress. The collapse of its vote in Tamil Nadu, and its drop from 2009 levels in Kerala in the recent Assembly elections are clear omens.
CRUMBLING FORTRESS, IMMINENT DECLINE
The road from 206 seats in 2009 to 272 that the Congress hoped to attain in 2014 has never looked more distant. The Congress has weakened in its fortresses. In the three states which gave the Congress a big chunk of 58 seats, the party is in complete disarray. These are: Andhra Pradesh (where the Congress got 33 of 48 seats), Maharashtra (17 of 46) and Tamil Nadu (eight of 39).
The Congress lost Andhra Pradesh the minute Home Minister P. Chidambaram announced that "the process of separation of Telangana from Andhra Pradesh will be initiated soon". That was on the midnight of December 9, 2009. Since then, the party has been trying to extricate itself out of a promise it can't keep. Add to this the fact that the most popular leader in the state is not the Congress Chief Minister Kiran Kumar Reddy but a party rebel, Jaganmohan Reddy. The legacy and popularity of the late Y.S. Rajasekhara Reddy, who delivered the state to the Congress twice, in 2004 and 2009, has moved on to his son Jagan. In Maharashtra, governance is at a standstill even as Chief Minister Prithviraj Chavan fights a rebellion instigated by rivals like Vilasrao Deshmukh, Ashok Chavan and Sushilkumar Shinde. The trailer for Tamil Nadu was evident during the recent Assembly polls when the Congress won only five seats out of nearly 300. This is not all. The party has already maximised its positions in its strongholds. For instance, in Delhi, the party won all seven seats, in Uttarakhand all five, in Haryana nine out 10, in Kerala 13 out of 20 (with six additional seats to allies), in Punjab eight out of 13, and Rajasthan 20 out of 25. In some other important states, it is almost certain that the Congress will not improve its tally.
In Uttar Pradesh, the party won 21 seats with a vote share of 18 per cent. Opinion polls conducted in the two years since suggest that the Congress has lost some of its vote share. In Bihar, the party will be lucky to retain its two seats given the huge popularity of the Nitish Kumar-led NDA. In Bengal, Mamata will not part with sufficient seats to let Congress piggyback on her popularity to better its tally of six seats.
The only major states where the Congress can hope to make some gains are Assam, Madhya Pradesh, Karnataka and Chhattisgarh, but the gains in each case are likely to be in single digits. Even if they do materialise, the gains will be insufficient to wipe out the losses suffered elsewhere. This is the price the Congress will have to pay for political confusion and poor governance.
- With inputs from Rajesh Sharma
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