Manmohan can get economy, and himself, back in the groove

It’s fair to say that Prime Minister Manmohan Singhhas had a rough three years in office. The UPA-2 government was conceived in deceit, and as the Niira Radia tapes revealed,  industrial houses and corporate lobbyists gamed the system right at the start to get politicians of their choice into key ministries.

The Prime Minister’s prerogative to appoint the ministry of his choice was sacrificed at the altar of “coalition dharma”, largely because the Congress’ political managers underestimated their own post-election strengths while negotiating with coalition partners. That failing has had disastrous consequences for policymaking, and the UPA-2 government, swamped by an avalanche of corruption scandals since then, hasn’t recovered from the malefic effects of that Original Sin.

Over time, the Manmohan Singh government has only compounded its problems by failing to read the economic headwinds right. At a time when growth engines were faltering, it took its eye off the ball. Of course, some of that slowdown was precipitated by the troubled global economic situation in the wake of the financial crisis of 2008; but failure to get some simple things right at home – bridging infrastructural deficits, perfecting service delivery mechanisms to prevent leakage and just the boring business of everyday governance –  accounted rather more for it.

It’s also true that theManmohan Singh government was saddled with recalcitrant allies like the Trinamool Congress, which made life a living hell for the Congress by stonewalling every effort at addressing macroeconomic deficiencies or inviting foreign investments. But in many ways, the more fundamental problem was the Congress’ own lack of conviction about any of the reform proposals.

Illustratively, Manmohan Singh has been very eloquent in showcasing the unique ID project as illustrative of the kind of changes that will revolutionise service delivery in India. But the reality is that even with his showpiece scheme, which had his personal backing, he hasn’t been able to ensure a satisfactory implementation. In the tug-of-war between Nandan Nilekani and P Chidambaram, Manmohan Singh opted for a messy compromise that won’t solve any of the core issues that the unique ID project was intended to address. (More on that here.)

When a demonstrably good project in which the Prime Minister has staked his reputation, and which is headed by one of India’s finest technocrat-CEOs, cannot meet its objectives and ends up in a schizophrenic mess, what chance do other, rather more courageous, proposals have?

Even at the best of times, the Congress is a conflicted party. And overwhelmed by bleeding-heart liberals like the members of the NAC – Sonia Gandhi‘s kitchen Cabinet that exerted an excessively disproportionate influence in economic policymaking – the reformists in the government, such as they are, retreated without the faintest attempt at challenging the narrative.

Add to that the disastrous tenure of Pranab Mukherjee as Finance Minister – arguably India’s worst in a long time – and the story of India’s economic paralyis of recent years is complete.

Yet, by a curious set of circumstances, the situation right now is propitious for Manmohan Singh to turn things around -for the economy and for himself.  Pranab Mukherjee’s imminent elevation to the office o the President, and just the fact that there are several gaping holes in the Ministry that need to be filled, gives Manmohan the elbow room to revamp the key Ministries in his image.

The ministry could do with some infusion of young blood, and there are a whole host of next-generation leaders whose services can be enlisted to spruce up the Ministry’s image and impart some youthful energy. (No, not Rahul Gandhi, who has made it abundantly clear that he isn’t worthy of any position in government, but the likes of Sachin Pilot and Jyotiraditya Scindia.)

The government too could do with such a blood transfusion: the political compulsion for it to show some signs of life is acute. The UPA-2 government has less than two years to go, and given the erosion of the political fortunes of the Congress and its allies at the level of the States, the alliance faces near-certain defeat if it cannot get its act together. More of the same policy paralysis that it has exhibited in the past three years will seal its fate.

For Manmohan Singh too, the next two years are critical: if he cares for his personal legacy at all, he wouldn’t want to go down as the ineffectual Prime Minister that he is seen as today. The generally held view is that once Pranab Mukherjee leaves office, Manmohan Singh will personally take charge of the Finance Ministry. This gives him one last shot at securing his legacy.

If he breaks free of Sonia Gandhi‘s apron strings by persuading her that the Congress’ own survival is at stake, and channels the energy of the man who – rightly or wrongly – is identified with the reform measures of 1991 that put India on the growth path, Manmohan Singh may yet get himself, and the economy, back in the groove.

(curtsey: economic times)

Rupesh Yatesh Dalal
Head Research Department

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