Manmohan Singh, the lost reformer

When Bhima and Duryodhana were fighting the last major battle of the Mahabharata, the combat was turning out to be indecisive, with neither gaining an edge. When Krishna realised this, he quietly intervened and showed Bhima his adversary’s vulnerable spots. Bhima took the hint and kayoed Duryodhana in due course.

In the Manmohan Singh versus Lal Krishna Advani duel, the latter is yet to find a chink in the prime minister’s armour. In fact, the PM has got the better of Advani, deftly shifting the spotlight to the BJP leader’s own weaknesses.

If Advani needs a Krishna by his side, I would advise him to read a recent issue of the Financial Times. It might help him as much as Krishna’s tips enabled Bhima to score over his rival.

In a devastating critique of Manmohan Singh and the UPA government in the Financial Times, Razeen Sally, director of the European Centre for International Political Economy, shows the PM as an emperor without clothes. He is India’s best-known reformer, but has, in fact, turned out to be unworthy of the title.

Sally’s article, titled “Congress deserves to lose India’s election”, says Singh “has squandered the boom years, left the country more vulnerable to malign global economic conditions and compromised prospects for a healthy recovery…Manmohan Singh and his ‘dream team’ have been given an easy ride: they have escaped blame, especially outside India.”

He compares Manmohan Singh’s poor performance as prime minister and his better record as reformer in 1991-96. He also recalls the great contributions of Narasimha Rao and Vajpayee to reforms. “He (Singh) deserves credit for his performance as finance minister in the 1990s — although credit should also go to Narasimha Rao, then prime minister, who took the tough decisions. The whole reform programme relies on the prime minister himself. Mr Rao and AB Vajpayee proved their mettle, despite heavy political constraints. Mr Singh has failed; he should bear much of the blame.”

His conclusion: “The Congress party does not deserve to be re-elected and the dream team does not deserve to continue in office. An alternative BJP-led government may do better if it has a decisive leader with a core of able reformers.”

As someone who is watching the battle from afar, Sally has the advantage of perspective and clarity, which many Indian observers don’t. I have often commented on the fact that the UPA government takes credit for things it did not do, and non-economists tend to believe the self-serving claims peddled by P Chidambaram and Manmohan Singh.

The plain, unvarnished truth is that the UPA reaped the benefits of the global surge in liquidity during 2003-08, as well as the reforms carried out by its predecessor governments. The NDA (and the UF governments before it) planted the seeds, and the UPA merely gathered the fruit. If this is achievement, I’m Tiger Woods.

UPA and Manmohan Singh deserve brickbats not merely because they are falsely claiming credit for things they did not do (all politicians do that), but because they are doing real damage.

They are handing over a much-destroyed polity and a debauched economy. Here’s why:

Fiscal irresponsibility: The NDA left behind an eminently sensible Fiscal Responsibility and Budget Management Act to prevent government spending excesses. The UPA has driven a coach and four over it. Today, the fiscal balance has been shot to pieces. From the day it was elected in 2004, the UPA has used the taxpayer’s money to get itself re-elected. Despite five years of high revenue growth, the government faces its worst fiscal deficit in two decades. The next government will inherit a scorched earth.

Fudged figures: Between Manmohan Singh and P Chidambaram, they fudged the fiscal deficit numbers by deliberately keeping the subsidies parked with the public sector oil companies. In short, the UPA robbed not only the taxpayer who funded these national assets, but also investors, who own shares in these companies. In the west, the PM and the finance minister would have a faced a class action suit for looting ordinary shareholders. The government has accused Satyam’s management of gross corporate misgovernance; it is guilty of much worse in the oil sector.

No reforms whatsoever: The NDA privatised several loss-making public sector companies and expanded public ownership of public assets. The NDA liberalised foreign investment rules and created the legal framework of competitive expansion in mobile telephony. It launched the first major infrastructure initiative - the golden quadrilateral. Even assuming the UPA’s priorities were different - the aam aadmi schemes - it could have reformed delivery systems so that the money spent went to the right beneficiaries. But even this hasn’t been done. It has wasted most of the money. The only reform it did - in civil aviation - is now leading to bankruptcy.

Cloak of honesty: The UPA government, led by “honest” Manmohan, has presided over fairly dubious decisions. The recent Israel defence deal was cleared with suspicious “business charges” of Rs 600 crore by Manmohan and another equally “honest” minister, AK Antony, among others. The worst corporate scam in Indian history (Satyam) happened in the bailiwick of a Congress CM, and the government has skillfully helped YS Rajasekhar Reddy cover up the political aspects of the scam - mostly involving real estate. Singh’s government also helped Sonia crony Ottavio Quattrochi run away with money that was frozen after the Bofors scam. If the PM knows nothing about these scandals, he does not deserve to be PM. If he does, he is an accomplice. Is this what honesty in politics is all about?

Let’s close with Sally’s judgment on Manmohan Singh’s non-performance on reforms: “The conventional excuse is that their hands are tied by Sonia Gandhi and her Congress coterie, and by coalition politics. This explanation just does not wash…Mr Singh has proved a hopeless decision-maker as prime minister. Sadly, he proves the rule that academics should generally be ‘on tap’ but not ‘on top’.”