Why Manmohan Will be More Effective than Pranab Mukherji

I am putting up a post here after some days. Much of the reason has been the lack of anything new or significantly different happening that would make me react. However, anybody who has been following my posts would realise how accurate my reading was about a reforms burst after the presidential elections. Manomhan Singh, the country's PM and the new Finance Minister is preparing for the burst. From what I have come to know and realise, there would be a burst of moves at the end of July. Expect this to continue up to November. Diesel price hike and pensions bill apart from Good and Services Tax (GST) clearly seem to be on the agenda. However, what I find interesting are the reports coming in the media that the PM was getting held back by the FM, Pranab Mukherjee in his reform push. Well, there is some truth in it I suppose. You can out it down to their different DNA. The PM is essentially an economist while the former FM is a politician despite his training of an economist. During his 1991-95 stint as FM, Manmonhan Singh's job was constantly eyed by Pranab Mukherjee. Nobody may now talk about it now but I have seen the fate of some people I know (economists) close to Pranab Mukherjee who were banking on him to get the chair. But that didn't happen despite the Harshad Mehta scam in 1992 when by the year-end Manmohan Singh showed his readiness to resign. Prananb had to be content with a portfolio like Commerce. Also, during that period Pranab's rehabilitation in Congress after his brief exile wasn't complete. I think it was only after he did quite a few dirty but effective jobs in leadership and other purges that he won the confidence of the top prty leadership. In UPA-II, he had argued internally that he was getting old and couldn't travel around, something needed in external affairs, his former portfolio. Once finance portfolio was given, it allowed him to chair the huge number of GoMs though one has to salute his ability to work hard. Will his exit make a difference? I suspect yes. Cocktail of politics and economics is always needed and that is where Mukherjee's brand of management worked as it didn't let anything go out of hand. But right now is the time for hard choices and decisive actions. It needs an economist and a reformer which Manmohan Singh is. Of course, one can always argue that Manmohan Singh always reforms under duress and with the back on the wall be it 1991 or now. But then, it can never be too late, can it?       

Our reforms clamour: pining of the naive?

For many months now, I have been reading with much amusement the statements of India's top business leaders and best brains voicing their concern about the near-stalling of the economic reforms process. Some of them talk about the present PM being the fther of economic reforms and find the current situtation an irony. A person can't take such a line of thought seriously beyond a certain point. If you consider the popularly acknowledged reforms flag-off point of late-June 1991, you also need to know that it was a flag-off out of compulsion rather than love for reforms. India's precarious forex reserve situation is well-documented as well as its other woes. India had little choice but to do the things it had to do to get IMF assistance. That is also how Manmohan Singh who was the secretary general of South Commission headed by former Tanzanian president Julius Nyrere suddenly found himself as India's finance minister and in the hot seat, talking and doing things that completely went against his intellectual and other leanings. In fact, many leftist economists accused Manmohan Singh of being "intellectually dishonest", a charge he took pains to defend himself against. What is also forgotten is that the V.P.Singh, Janta Dal and Chandrashekhar governments kept sitting on the decision to go for the IMF loan letting the economy go for a tailspin--in the backdrop of the first Gulf War of 1990 as Iraq invaded Kuwait and later was attacked by US and NATO-- even as they went overdrive working out their political fortunes in the backdrop of Mandal disturbances and BJP's Rath Yatra. If you need evidence you could go through the archives of Business India magazine during that period. It may sound terrible but unless pushed to the wall, we can't really expect a reforms burst from ths government. Neither do we have across the spectrum political consensus that gives these issues primacy nor do we have a leadership that can muscle the agenda  through.

Worldwide, in democracies, in the first two years of a government's term, one finds the boldest moves since the governments are high on confidence since they have just got the people's mandate. They go slow subsequently since they want to get re-elected and thus prepare the ground for it by populist measures and or paying lip service to some reform measures. What I find odd in case of UPA-II is that they have screeched to a halt very early on. Can they break this typical trend of democatic governments? Time will tell.