The real ties that bind

It is not only the Left who opposes market-led reforms.

N Chandra Mohan

The flavour of media commentary of late is that Prime Minister Manmohan Singh simply has lost his way and that he no longer commands the public imagination. With three years left of its term in office, the Dr Singh-led United Progressive Alliance (UPA) is widely perceived as drifting, if not foundering, on the shoals of coalitional imperatives. Rahul Bajaj, the industrialist and newly elected Rajya Sabha member, was perhaps only stating the obvious when he blamed the political configuration for tying the government’s hands.

“If I were the Prime Minister or the Congress President, I would be constantly wondering when to hold the parliamentary elections. If I don’t do so, then I am not doing my job right,” he argued in an interview. This industrialist was only expressing his sense of frustration that Dr Singh’s government couldn’t progress even a wee bit on economic reforms due to its critical dependence on political support from the Left. The burden of his song is that they have to ultimately make a call on how long this drift will go on.

There is no doubt whatsoever that Bajaj was also reflecting the popular mood regarding Dr Singh’s government. Nowhere is this widespread perception of drift more obvious than in the complete erosion of food security and spiralling prices of essentials like wheat, sugar, pulses, vegetables and so on. From an era of self-sufficiency in food, the UPA government has succeeded in taking the country back to the era of ship to mouth existence like in the late 1950s and 1960s by resorting to massive imports of wheat.

This is hardly a mean achievement. As if all of this were not bad enough, the UPA’s belated response to rein in inflationary expectations is again to resort to imports of sugar and pulses. But this may not work as imported wheat and sugar are, in fact, dearer than domestic prices. Such measures are no substitute for paying greater attention to the crisis-ridden state of agriculture, as has been argued by Dr Singh himself. Actually, it is to the credit to the Left that they have consistently raised such issues with the UPA.

Nevertheless, there is a widespread impression that the Left is anti-reform. No doubt, this is partly true. After all, the Union cabinet has again decided to disinvest a small part of the government equity in two public sector undertakings, the National Aluminum Company and Neyveli Lignite Corporation, but the Left would hear nothing of the D-word. Similarly, the Left is opposed to the opening up India’s retail sector to foreign direct investment and further liberalising the insurance sector.

But there is another source of opposition to reform that is rarely mentioned in popular commentary. This is the private sector that many consider to be an ardent advocate of liberalisation and globalisation. Far from it. There are, in fact, influential sections within big business, the segment from which Bajaj hails, that oppose this process although they make it a point to applaud, through the various apex chambers, whatever the prime minister and finance minister do in the Union budget as historic.

Deep down, however, they use their political supporters to sabotage reform. Take, for instance, the various free trade agreements (FTAs) that Dr Singh is pushing as part of his economic diplomacy drive. Bajaj himself has misgivings regarding the benefits of such FTAs for India Inc. So, too, do the various apex chambers. Yet the domestic opposition to such agreements is portrayed as a political one with sections of the ruling Congress trying to undermine the authority of the reformist prime minister.