Let's talk governance

Balbir K. Punj

After five years in power Atal Behari Vajpayee and his coalition government have done nothing worthwhile to be declared before the people; this, if you believe the Opposition and a section of the media.

They also tell you that the government does not have the political will to get going on the road to reforms. And if the government drives along the reforms-road, it is accused of going very fast, ignoring the human face, creating unemployment and what not. So, what should the government do?

More than the carping critics in the media, it is the main Opposition party's criticism that should make people wonder whether that party has disowned its legacy. For some 40 years, the Congress held on to Nehru's legacy of command-and-control economy that enabled some capitalists to fatten themselves with no worthwhile competition to face so long as they kept the ruling party happy.

The cap on capacity, on everything, from cars to cement, meant that the economy of scarcity continued for long, and people had to knock at the doors of ministers, politicians and officials for a car, a telephone or even a railway or airlines ticket. The only non-Nehru-Gandhi Congress Prime Minister, was, in 1991, left with the legacy of an economy on the brink of collapse and he had no choice but to discard the Nehruvian ideals and go for liberalisation. Is the current Congress president trying to disown P.V. Narasimha Rao's legacy, with the chief architect of that policy, Dr Manmohan Singh, at her elbow?

A leader is recognised by the vision he or she imparts to people. By that criterion, in the last five years, the Vajpayee government has done more than what any previous government with much longer tenures had even attempted. In 1999, this government declared its intention to make India an IT super power and specified a road map for it. That included the big jump to software exports from six billion dollars at the time to 50 billion dollars by 2008. By 2002-03 that export has already reached 10 billion dollars and no one in the industry today doubts the ability of the country to reach the 50 billion-dollar figure.

The Vajpayee government's mission to provide world class telephone infrastructure has advanced fast with 40 million telephones and 19 million mobile phones in the country, more than double the number at the time of the government coming to power. This figure will be doubled in the next three years. To have good telecommunications is the first step in getting investors, both Indian and foreign, to put in their money even in remote areas. Just a comparison: Narayanamurthy of Infosys fame, an IT icon, had to make 18 trips to Delhi during Congress' regime to get an import licence for a computer needed to create software for export.

The critics are picking on the slow growth rate of the last five years forgetting that the average growth rate has been above five per cent despite the condition of the global economy during this period. The latest Economic Survey has observed: "Despite monsoon failure, the rebound in growth observed since 2001-02 gained momentum in industry and services sectors." Also, "Continued macro-economic stability in terms of low inflation, orderly currency, market conditions, and comfortable reserves," distinguish the five-year record. Despite a drought, there are no shortages. In fact, the government is troubled by the huge surplus of foodgrains and sugar. In fact, the foodgrain reserve has doubled from 30 million tons to 60 million tons in these five years and there isn't any space to store the grains! If there are pockets of starvation in spite of this, the state governments must answer as they are in charge of distribution, and many of these state governments are ruled by the Congress.

Has the common man benefited in these five years? When bank credit for priority sectors like agriculture, small industries, artisans, weavers, etc., jumps from Rs 90,738 crore to Rs 149,116 crore in a low inflation environment, who else but the poor and the common man benefit? When bank advances to agriculture moves from Rs 27,746 crore to Rs 38,137 crore, is that not a huge support to the farming community? Ever since Vajpayee became Prime Minister, 20 million farmers have benefited through the national agricultural insurance scheme that protects them against crop failure. Some 64,000 crore have been distributed as credit through the Kisan Credit Card. When housing construction loans register a growth from Rs 3,279 crore to Rs 17,029 crore, is it not the middle class that is benefiting? More so, when interest charges are also down from 18 per cent to 10 per cent? Does not the common man benefit when charges for STD and ILD come down by over 50 per cent?

The Vajpayee government's vision for infrastructural development comprises improving highways, village byways, ports, railways, power and telecommunications. Their implementation in the last five years has hardly any parallel in the history of the country. From the time Sher Shah Suri constructed the Grand Trunk Road never has the country embarked on such a huge road building project as this government has. The vision is to construct over 12,000 kms of world class roads connecting east to west, north to south, as also connecting highways to ports and major industrial centres.

The Golden Quadrilateral Phase I will extend to 5,846 kms, of which, 1,159 kms have already been completed with the rest expected to be finished by 2004. The next phase, the north-south, east-west corridor will have 7,300 kms of world class concrete road. The entire project is slated to be completed by 2007. The Rs 30,300 crore Phase I of the project has already given contracts worth Rs 25,000 crore to different Indian and foreign companies without generating even a single whisper of corruption. Is there a comparable record during 40 years of the Congress regime? This network would be supplemented by village roads under the Pradhan Mantri Grameen Sadak Yojana linking all villages.

There are two ways of approaching poverty. One is to give something for the time being but generally keep the people poor. The other is to improve the capacity of the poor to earn a better livelihood to improve the quality of life. A cheaper housing loan is better than a reduction in house rents. Diversified agriculture and increased agricultural productivity (as distinct from production) serve the farmer better than an increase in subsidies for generating more food at an ever rising cost.

In financial reforms, the government has got a fiscal responsibility legislation passed. It has sought to lift the state governments from the perpetual problem of deficits through an agreement to commute their loans linked to their fiscal reforms. A single purchase tax system has been agreed upon through a political initiative that would also prevent the taxing of taxes. If some traders are opposing this, it is mainly because they are not willing to undergo the pains of changing over to a better system of taxation that will ultimately benefit them as well as the consumer.

The Vajpayee government has introduced extensive financial reforms by enacting securitisation to save the banks from non-performing assets and enabling them to seize defaulting businessmen's property. A countrywide system of reducing interest rates should spur investment and thus create more jobs. As the Prime Minister said the other day, additional jobs cannot be created by simply employing people in government. The emphasis on the growth of services is creating the right environment for large investments in infrastructure and services that are more labour intensive. India is becoming a world centre for services and this will provide jobs to accountants, call centre operators and even ordinary graduates in thousands and thousands. At least one million jobs will be there for the middle class in the next two years alone.

Probably the best demonstration of Atalji's firm stand is in the power sector reforms. For years, several governments at the Centre have suffered mounting losses in the power sector and have sought to attack it by exhortations. This government has gone out with a road map to change the situation by getting state governments to commit themselves in writing to a reform agenda: by linking further aid to them to a progress in reforms and through encouraging them to privatise distribution so that the root cause of political patronage in power distribution is eradicated at source.

Losses in the power sector have mounted to Rs 40,000 crore and the state governments are confronted with the harsh reality that they have to either reform or face bankruptcy. The Centre has created the incentives for reforming the sector and has relentlessly pursued it even at tremendous political cost as this will not be popular. But where national interest is concerned as in the power sector, this government at least has shown that it is prepared to administer the bitter pill rather than take the easy way out by doing nothing.

When one considers that such all round and radical initiatives have come from a government run by 23 political parties, we see the stress on the Prime Minister and his adroitness in handling the internal tensions. His radicalism has challenged many old ideas and concepts. This is a man with his feet on the earth and a vision far beyond the horizon.

Balbir K. Punj is a Rajya Sabha MP and convener of the BJP's Think Tank. He can be contacted at bpunj@email.com