PM’s got it Right

Despite his deplorable track record at the helm,  the prime minister must be congratulated for securing the best bargain under the circumstances on the nuclear deal

Mohan Guruswamy Delhi

I have never been much of a fan of Dr Manmohan Singh. I have always believed that a prime minister without a national political constituency can get out of touch with reality, unable to respond to public aspirations and manage long cherished beliefs. His prime ministership should never have been for this long, for at best he could have been another Moin Qureshi, the former IMF and World Bank official, who led Pakistan for a brief period (July 18-October 19, 1993) to conduct fair and early elections after all avenues to resolve a not infrequent political impasse in that country failed. Like Manmohan Singh, Qureshi, too, has a PhD in Economics, but I suspect a slightly better one in quality even if it is from a middling US university. But before he faded into obscurity, Qureshi managed to put into place some long overdue reforms, the economic benefits of which Pakistan is still reaping.

We all know how Manmohan Singh became our prime minister. Sonia Gandhi did not want that job and was not willing to trust a politician from her party with that job either. So we got our own former IMF and World Bank official.

Like Qureshi, Manmohan Singh, too, is motivated to do what he thinks is right for the country. He also wears blinkers forged by the dubious consensus that prevails in the rarefied heights of the international monetary system. Like Qureshi, Manmohan Singh is a decent, honest and well-meaning man wanting to do the right thing for the country. Unfortunately for him, a democracy is a system of government run by elected politicians and not by nominated bureaucrats. If you look at the construct of the Prime Minister's Office (PMO) and the small circle of advisors the prime minister has around him, not one has, let alone been an elected politician, even served in a party organisation.

Politics is the art of the possible, but to a bureaucrat everything is possible. This is why the PMO is seen to be initiating and attempting to ram home policies without building a political consensus. Besides, I don't see any qualities and experience in the prime minister that gives him that consensus-building ability, which is the single most essential quality of leadership. Jawaharlal Nehru had that in abundance. Even Indira Gandhi, for all her imperiousness, never went ahead without building a broad consensus. Every other prime minister we had seldom went forward without seeking general approval first. Even Rajiv Gandhi, with his massive majority, was never oblivious of political opinion around him. And here we have a prime minister wanting to do things, no doubt the right things, despite not having the right numbers behind to do it.

Manmohan Singh’s track record in recent months has been truly deplorable. Look at the manner in which the SEZ issue was handled. Even a Cambridge educated economist should be able to convince the nation that a services dominated economy is not what the doctor should prescribe for India. It seems that we have become a post-industrial economy without ever having been industrialised! This is a truly absurd situation. Only industrialisation can create the jobs required to absorb the millions coming into the job market each year. But over the years we have created an atmosphere inimical to industrialisation. Like China did during the Mao era. This is a major reason why we need SEZs now.

Our politicians are not among our better informed persons. To compound matters, our civil society, which is where ignorant politicians get conditioned to imperative policy options, can often be just as ignorant. Our problem is that we see facility in English as a mark of education and civil society is full of self-educated and versatile English-speaking people. Instead of seeking to condition political opinion on SEZs, the government just announced a policy and left the selling to be done by interested parties like the Confederation of Indian Industries (CII) and others. It should be obvious to even one most ignorant about politics that this is like showing red to the bull.

Take the case of the policy allowing Foreign Direct Investment (FDI) in retail. Heavens would not have fallen if the prime minister did not make the time for Joe Menzer, who is not even the CEO of Wal-Mart. Wal-Mart has a particularly odious reputation all over the world, and particularly in the US, for its ruthless exploitation of unskilled workers, women, minorities and vendors. Hating Wal-Mart is a major, and to many, fulltime vocation in the US where dozens of websites proliferate on the inequities heaped by Wal-Mart on the helpless and hapless. India's retail business is its largest employer after agriculture and it is so because small retail is often the only recourse of the unemployed or uneducated.

Our failings in creating jobs and not educating our people are well-known. Mass format retailing brings with it certain efficiencies of scale and consumer benefits. It is also inevitable. No market democracy can deny it an existence. But the entry of the big rapacious ones like Wal-Mart could have been delayed as foreign investments are governed by a different administrative regime. But the prime minister and his top advisors made it the <leitmotif> of liberalisation.

Once again, in recent months, we have had a flurry of Indo-American military exercises. It seems that one is on every other month, giving the impression of a far deeper military understanding between the two countries. Let me backtrack a bit. No nation can have a military understanding with the US as an equal or partner. The American mindset disallows this. The US does not participate in any international peace-keeping operation unless it is under American command. Therefore, real military cooperation with the US, now or in the future, is only for NATO countries or formal allies of the US. We are told that the naval exercises are meant to get us prepared for joint patrolling of the Indian Ocean and of choke points like the Straits of Hormuz and Malacca. But under whose command will this happen?

The US has a penchant for acting without UN sanction. It will not allow reform of the UN so that majority opinion can prevail. The irony of this is that if this was so the US would have got majority support in the Security Council over Iraq. Typically, the US wants to keep the cake and eat it too. That is why there was so much popular anger over the visit of the USS Nimitz and the ongoing naval exercises.

One can understand all these exercises and joint planning taking place, if we got a good deal from the US in terms of grants and assistance for weapons procurement. Israel, Egypt and many others benefit from US largesse for their cooperation. But does India get any deal from the US which makes this cooperation worthwhile? Even to buy obsolete military hardware from the US like F-18 fighters we are obliged to pay the highest prices. So the question is: Why this touching faith for all things emanating from Washington DC?

It seems the birds are coming home to roost over the nuclear deal with the US. It's another matter that the BJP was discussing just this deal with the US before it was ingloriously turned out of office. Mind you, the BJP-led NDA government was even willing to send troops to Iraq in return for little more than just a pat on its head. This is the party that recognised China's occupation of Tibet for as little as a semi-official website acknowledging Sikkim's integration into India as a done deed, after having taunted Jawaharlal Nehru for years for having forsaken the Tibetans. Then, for a while, it had a different view of Jinnah's place in history. But now the BJP has once again discovered nationalism and goes hammer and tongs at the nuclear deal with America.

The communists have stayed true to form. In their book anything anti-American is kosher. Just anything anti-Congress is kosher for the BJP. Both parties are driven by their antipathies even if it means throwing out the baby with the bathwater.

Which is what they are doing when they reject the Indo-US nuclear deal. Three concerns seem to predominate. First, it would undermine the indigenous nuclear programme. Second, it would impair the weaponisation programme. Third, it would compromise our independent foreign policy. None of these fears is well-founded. It seems just politics, as usual.

If the indigenous programme was any way on track or near it, we would not have needed the deal with the US as badly as we do it now. The simple truth is that the Atomic Energy Commission (AEC), much like the Defence, Research and Development Organisation (DRDO), has hidden behind layers of secrecy to cover up its non-performance. We have less than 4000 MW of nuclear power generation capacity and our nuclear power plants are functioning at about half that capacity due to serious technical and unresolved safety issues. A white paper would be in order. And this is not the time or place to delve deep into this.

As for the weaponisation programme, the communists have all along decried it. Even the BJP did not have more than a cock-a-snook round of tests. Remember, it wanted the tests for little more than political reasons. Atal Behari Vajpayee has often been on record as wanting to test even in his first 13-day interregnum as prime minister. I can understand if he has forgotten about it, but surely his colleagues can still recollect it! The BJP voluntarily eschewed all further testing. So what is this fuss about testing? The day India thinks it needs to test, it can abrogate the treaty with the US and get on with it. A treaty is not for life. It is only for as long as it suits both parties.

As for compromising our independent foreign policy, after committing troops to Iraq, has the BJP any moral right to speak about the issue? Does signing the deal imply that we have to see eye to eye with the US on all issues? Even its NATO allies don't do that and there is no reason why we should.

On the Indo-US nuclear deal, the government has done well and done the right thing. The prime minister and his negotiating team must be congratulated for securing the best bargain under the circumstances. As India embarks on a period of high economic growth, and we have a window of just a few decades in which we make our transition from a low-income country to at least a middle-income country, our requirement of energy to power that growth will grow exponentially. International hydrocarbon resources are finite just as national hydro-electric potential is.  Coal-based thermal plants too are a limited option given the attendant problems due to atmospheric pollution. Nuclear power, under the circumstances, is our best and possibly only option.

We need at least 45-50,000 MW's of nuclear power capacity if we are to get on to a growth trajectory that is annually two per cent more than what we are expected to achieve. Assuming we grow at 10 per cent after 2020 instead of eight per cent, the cumulative difference in GNP created till 2050 would be in the order of over $100-120 trillion. That is not small change. India's population will stop growing around then and it will start aging. This means the dependency ratios will become increasingly burdensome, precluding rapid economic growth. Therefore, this is one time I am with Manmohan Singh. The numbers are with him!