"After waivers, put some money in their hands"

Sanjay Kapoor Delhi

Self-effacing to a fault, R Prabhu, MP from the Nilgiris, Tamil Nadu, is perhaps the most enduring Parliamentarian in the Lok Sabha. Into his sixth term, Prabhu, an engineering graduate from MIT, USA, was a close confidante of Rajiv Gandhi, who appointed him fertilizer minister. An articulate and clear-headed politician, Prabhu is also member of the standing committee of the finance ministry. During his speech on the Union Budget, Prabhu presented some fresh ideas on how prices - which is going to be a key issue in the next elections - could be tamed. He suggested that the tax structure should be rationalized, value added tax be lowered and a tough anti-hoarding drive be launched. He also felt that a grand scheme like loan waiver would not work unless the banks are made to behave. He pointed out at how the Indian Bank had scandalously sold non-performing assets of MVR exports, a company that figured in the Rajiv Gandhi assassination enquiry for providing arms to the Tamil Tigers, for a song. He praised Rahul Gandhi's mass contact programme and his criticism of the party's so called high command, who in his reckoning are self-styled leaders who surround the Congress president.

Excerpts from his interview:

This is your sixth term in Parliament. What does it take to get elected all the time?
I came to Parliament in 1980 when Indira Gandhi became prime minister. I have fought eight Lok Sabha elections from the same constituency - Nilgiris in Tamil Nadu. I think if a candidate has to contest from the same constituency in every election he has to be sympathetic to the people's problems. Water has been a major problem in my area, but due to my efforts there is now abundant water supply in rural areas of Coimbatore, which is part of my constituency.

What do you think of the view that scaling down farm subsidies has been responsible for distress in the countryside?
Bringing down subsidies is not an issue. Had we targeted our subsidies to the right people, those who really need help, there would not have been a problem. There is a need to redesign many schemes by ascertaining the history and geography of subsidies and find out what worked where and how.

There is near unanimity between the Congress and the Left on price rise. On the one hand is rising inflation, while on the other, there are people in the industry who are demanding cuts in interest rate to boost growth. How does the government balance this?
China has a growth rate of nearly 10 per cent, with 2 per cent inflation. Their system is different, but we can create a properly designed system that has less inflation accompanied by high growth. We need to cut interest rates that will fuel growth in the industry and also provide job security. However, we need to keep an eye on inflation because of excess money pouring in the system. What is really happening sometimes defies logic. On the one hand we have schemes like the rural employment guarantee scheme. On the other, traditional big industries like sugar, textile, plantation and jute are becoming sick. How do you account for the fact that when there is excess sugar production in the country, exports are banned?
Similarly, tea, coffee and spices, which are also large employers, require help. A package of Rs 4,500 crore has been earmarked for the tea industry and large tea plantations are being helped. But this package is unmindful of the lakhs of small growers who produce nearly 30 per cent of tea in India. It is important to extend the benefits of this package to small growers too.

But how do you reduce prices?
By revamping the PDS and bringing more commodities that are used by poor people into it. I am sure our economists know how to do it. Unless you ban trading in commodities, and futures, and get tough on hoarders, prices of essential commodities cannot come down.
Efforts should also be made to ensure that the PDS system caters only to people below the poverty line - where 30 per cent of the population resides. Now that computers and data processing have come of age, it is possible to effectively monitor this all over the country. I am happy they have made a beginning in Haryana and Chandigarh, as stated in the Union Budget.
Another decision that has contributed to inflation is value added tax (VAT), which has raised prices by nearly 25 per cent. VAT works only in a unitary form of government and not in a federal system. I have requested the finance minister to reduce the peak rate of VAT from 12 per cent to 8 per cent. In fact, there is a need to rationalise the tax structure. What is the need for so many new taxes such as service tax, fringe benefit tax and dividend distribution tax? They all contribute to inflation.

Do you think the loan waiver can solve farm distress?
I think the loan waiver is an innovative scheme and full credit should be given to Congress president Sonia Gandhi. Rahul Gandhi has also given some good suggestions. He was right when he said that farmers from dry land and farmers from irrigated areas should be treated differently. There should also be some provision for small and marginal farmers who have taken loans from money lenders.
I am sure a farmer would be satisfied if his debt is waived or paid for. Now we need to put some money into their hands, give them some subsidised seeds and fertilisers so that farming could take off or otherwise we will face a severe food crisis. This country's population is growing at 3-4 per cent and agriculture production is growing only at 1.2 percent. It is important to increase the productivity of farmers. Food imports would only feed inflation.
Another issue is that small and marginal farmers cannot easily get loans from nationalised banks. The system is bureaucratic and corruption-ridden. Ideally, banks should come forward and lend money to small and marginal farmers at an interest of 4 per cent to lift the agricultural sector. They should also revive schemes involving animal husbandry.

You were mentioning in your speech that a bank was selling off non performing assets for a song
This is about the Indian Bank selling the NPA Debt of MVR Exports for a shockingly low figure. Originally, the loan was around Rs 400 crore. The company pledged various assets, mostly real estate, in Chennai, worth about Rs 1,000 crore. The NPA amount had gone up to Rs 1,300 crore. Suddenly, there is the Indian Bank selling this NPA to an asset reconstruction company without any auction but through negotiation. The assets were sold at a ridiculously low value of Rs 180 crore. The opaqueness of this act aroused suspicion all around. When I got to know about this, I asked the chairman of the bank how assets worth Rs 1,000 crore could be sold for a meagre Rs 180 crore. He replied saying the matter was sub judice. When they treat a MP like me so shoddily, where is the hope for farmers.

What are the prospects of the Congress coming back to power in the next elections? Do you think Rahul Gandhi's criticism of the high command and his demand for greater democracy and transparency would help the party?
What he meant by high command was probably some self-styled leaders who are around the Congress president who try to insulate her from other leaders and give her wrong advice. I am sure that the Congress president is more than capable of taking correct decisions despite this.

The Congress seems to be in a bad shape. Do you think it has what it takes to come back to power?
I think all parties are confused at this stage. We have to get our act together and revamp our party at state levels to become more effective. There are certain things that need to be done not only because of elections but because we are responsible to the masses. Prices of essential commodities and articles of daily use have to be brought down. That should be the starting point.
I do think we will form the next government. Every Congress member has to strengthen the Congress at their levels. They cannot hope for coalition politics to bail them out.

In West Bengal and Kerala, is the Congress directionless because the high command does not want to antagonise the Left?
I don't think so. Even in West Bengal and Kerala, Congress leaders are involved in constructive criticism. It depends on local leaders. Just as in Tamil Nadu we might not agree with some of the decisions of our coalition partner, the DMK.
There should be constructive criticism and no personal attacks. You may disagree with politics or policies. We have our own problems, they have theirs. I think we should coexist and try to come to some sort of agreement in the interest of giving the nation a good government.

National parties have to lean heavily on regional outfits to come to power. How much of this is a factor?
Regional parties are a fact of life. Coalition politics has come to stay, at least for the next 10 years. The only thing that overrides it is charismatic leadership. I expect the combination of Sonia Gandhi and Rahul Gandhi to revitalise the charisma that the Gandhi family once had. But that will take another five years.

TN has become a template for a certain kind of coalition politics. You have a national party having an alliance with a regional party. How do you crack the problem in, say, UP?
I am not very conversant with UP politics. Basically, the people of India are the same everywhere and the politics is similar. We need to strengthen ourselves by making MPs and ministers accountable to their constituencies like DMK has done in my state. Only then will a party succeed. Unless the Congress is strong, it will not enjoy the respect of regional parties. Also, leaders that have political clout in their states should be given positions in Delhi.