By Decree Alone

With barely a week to go before the Budget session of the Lok Sabha, there is naturally considerable trepidation about what’s in store for the common man. All the indications have made it abundantly clear that it may be a harsh Budget, at least for those in the middle and lower income groups, who constitute the overwhelming majority in our society.

A peculiar feature of the dramatic economic reforms of the last eight months has been that practically every major item has been sprung as a surprise upon the country, without preparing the public by explanations and discussions, not to speak of debates.

In fact, whatever debates have taken place were mainly after the decrees were announced and not as an exercise to psychologically prepare the public. One has to concede to the critics of the government’s reforms that they have been more active than their advocates, and it has been mainly at their initiative that the government has in some cases been compelled to respond. As one looks back, there was only one jamboree-like gathering of economists right at the very beginning which was noteworthy for the generalities uttered in support of what’s become a cliché today—namely, integrating the Indian economy into the global course. No details were given about the design and the pattern of the economic reforms in the offing.

Although the Finance Minister was at the beginning vociferous in claiming that his reforms packet was entirely swadeshi and not a Fund-Bank model, it was later found that his prescriptions have been largely dictated by the IMF conditionalities. The persistent tardiness in the government’s release of the correspondence with the IMF and the copycat submission to the IMF diktat as revealed in that disclosure, has led the public to believe that whatever the Finance Minister’s personal credentials as an economist, there is no gainsaying that he and his team have totally identified themselves with the Fund-Bank position, without the least originality on their part. There were many distinguished people in the government in the past who were inclined to the IMF line, but none of them carried out so totally, to the very dot, the IMF behests.

Leaving aside this bankruptcy in the thinking on economic issues in the government, what is strange is that there has been no effort at conditioning even the ruling Congress party, not to speak of the public at large, about the entire packet of proposed reforms, and the implications of each of the measures. Obviously, nobody in the government or in the Opposition questions the need for economic reforms in principle. But there are widespread misgivings about the impact of the specific reforms programme of the present government on different sections of the people, particularly the lower income groups.

The overall impression so far created by the government’s economic measures is that these will widen the existing disparities to a point which is likely to generate unrest that may have serious social consequences. This is a question which the Finance Minister seems to evade answering all the time. The Prime Minister has been talking all this time that the new process is irreversible, but little has so far been done to enlighten the public about the totality of the actual reforms and what these are supposed to bring about for the country, and for different sections of the people living in this country.

This is by no means an unreasonable complaint. When in the early fifities, Jawaharlal Nehru’s government decided to go in for industrialisation in the classical Industrial Revolution model of first building the heavy industries, he assigned it to Mahalanobis to openly interact with leading economists in the country together with many distinguished figures from different countries of the world so that there could emerge out of their collective wisdom a model suitable for a developing country of our complexity and diversity and level of development.

This debate was purposely kept on for nearly two years, before the Second Plan-frame was produced and that Plan-frame was widely debated in many forums apart from Parliament before the specific measures were enacted. The entire intelligentsia of the country—not merely a band of economists—were involved in this nationwide debate.

Compare that exercise with the present one under Manmohan Singh. On every issue, the government has been fighting shy of talking to the public in detail. There is a conspicuous lack of any interaction whatsoever. Even Ministers are not clear what to say or not to say. The distance between Mahalanobis to Manmohan is the difference between open, democratic debates and the abject carrying out of the Fund-Bank orders.

One Minister talks of the rupee being soon made a convertible currency. The present writer has asked as many as four senior Ministers who denied any knowledge of such a move, while one of them totally discounted such a possibility in the near future. The point to note is that the ruling establishment itself is kept in a state of ignorance on such a major issue as bringing structural reforms in the economy of the country.

Coming to the more specific questions, there has been an equally conspicuous absence of any effort at elaborating, for instance, the Exit policy. For one thing, the Finance Minister chose to announce it categorically, not in the country but in the assembly of Fund-Bank bigwigs at Bangkok. Since then, the trade unions and others concerned with labour have been asking the government to spell it out. But the government has throughout been fighting shy of explaining its position. When cornered, the Ministers promptly say that nobody would be thrown out of job.

What sort of Manmohan Exit policy is this that nobody would loss his job? Such a mystery needs to be cleared up particularly in a democracy like ours. One can of course understand the government’s predicament and consequent hesitatation in announcing any policy that would be patently unpopular. But if the government is in no position to muster public support for a policy, would it not land itself in a situation of large-scale discontent which ultimately would strike at its own precarious stability?

Accountability is essential in a democracy. The Finance Minister confidently assured only seven months ago that there would be no double-digit inflation. But now inflation, by official calculation, is reported to have gone beyond 14 per cent.

In these intervening months, nothing extraordinary has happened that could have upset the Finance Minister’s estimate of last July. Then, does he not owe an explanation to the public as to what went wrong, why his Ministry had gone so wrong?

This is not just a simple question of a ministerial lapse. If at such a crucial moment, the Finance Minister can make such a serious mistake, what confidence would the public and Parliament have on his being given such a major assignment as overhauling the entire economy? Are we in safe hands? Such a question will neither be unfair nor far-fetched.

It is all very well to talk loudly about integration into the global economic trend, but to carry out such a gigantic task while maintaining one’s economic independence, requires competence of the highest order—not those borrowed from the Fund-Bank storehouse, which has a rather unsavoury record of ruining many of the developing economies. Above all, such an undertaking has to be in the open, by patiently explaining to the public all its implications, and enlist their trust and confidence. Otherwise Yeltsin-like anarchy will destroy the fabric of our democracy.

(Mainstream, February 22, 1992)