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?       

Uncomfortable Truth?

Another day and yet another faux pas. The government seems to be having little trouble saying things and backtracking later. The latest in the series is the government's economic Advisor Dr Kaushik Basu saying that one can expect Big Bang Reforms only after elections in 2014 as the new government will have the requisite majority in the Parliament. Though embarassing, Basu was speaking the truth. But honesty and politics perhaps don't go hand in hand, do they? Once the principal opposition party BJP latched on to the statement, the government said that the economic advisor was "misquoted". How's that for an original excuse? If you take  a close look at some of the economic reform legislation pending, be it Direct Taxes Code or the Goods and Services Tax (GST) or the pensions or insurance bills, one will realise why Basu was speaking the truth. They don't seem anywhere near the horizon when it comes to being passed by the Parliament.  We will be lucky if we see DTC and GST through by 2014. Moreover, the present government isn't getting the support it needs from its allies to pass these legislations. So, why the denial? Will it help delude people? You bet it won't.