Interview/Manmohan Singh
The last two years
Moving on, the last two years in office, when the momentum
of reforms had slowed down, must have been a source of frustration.
Yes, certainly. The momentum of reform slowed down. Subsidies
were allowed to rise. Expenditure went up. For a finance minister
committed to reform, it was a very unhappy time.
You have talked repeatedly about the fiscal deficit and government
spending during those two years. What do you think should have
been done?
Frankly speaking, I think we should have evolved a more coherent
policy for economic reforms. It was essentially a case by case
liberalisation. In the power sector, problems like Enron and now
Cogentrix would have been avoided if we had evolved a more holistic
approach. For instance, in the power sector, it was not enough
to invite private industry. If the state electricity boards continue
to lose Rs 2,500 crore (Rs 25 billion) per annum then it is a
route of bankruptcy. We needed a holistic approach which allowed
us to address the problems of the public sector as well.
That's all very well in theory. But the reason there was no
holistic approach was because the political establishment was
never really committed to liberalisation. It agreed to the reforms
because the house was on fire. But once the fire was extinguished,
everybody lost interest.
Well, there is an element of truth in that. And that's what
you find today. Because the balance of payments situation was
improved there is no enthusiasm for tackling the long overdue
problem of low productivity in our country.
It is only a crisis that concentrates the mind. That is the weaknesses
of our system.
The legacy
Looking at the state of the economy today, would it be fair
to say that your government must accept much of the blame?
No, I don't think that this is at all fair.
The prime minister has said that his government inherited an
economy that was heading towards this situation.
I think they inherited a very healthy economy. They inherited
an economy in which inflation was under control, the rate of growth
was 6 per cent, exports were going up and foreign exchange reserves
had shot up. The only problem was, as I have said, that we should
have cut back on the fiscal deficit.
Are you saying that there is a crisis of confidence now?
It is not only for me to say it. The heads of CII and FICCI
have made public statements to this effect. Everybody is saying
it. There is no doubt that investors and business people lack
confidence in the economy at present.
And you don't accept responsibility?
As far as confidence goes, I've told you that the Sensex was
at 4000 points when we left in June. Despite the tight credit
policy, business people were not pessimistic or uncertain about
the future. Rather there was an air of optimism.
I think that when you talk about inheriting an economy that is
in bad shape, you should remember the economy we inherited in
1991. Inflation was at 16 per cent and rising, foreign exchange
reserves were at their lowest, the rate of growth had come down
and the world was ready to give up on India.
How does the world feel about India now?
As far as I can see, the general view abroad is that India
has given up on the reforms, that they have stopped.
Foreigners are affected by the same uncertainty as businessmen
in India.
The new finance ministry
If you don't accept the responsibility and you say that the
economy is in a mess, what you are effectively saying is that
it is due to the mismanagement of the economy by this government.
I would not like to be drawn into that. I don't want to say
the finance minister is wrong or lecture him on what I would have
done.
Why not?
I have a lot of respect for Mr Chidambaram. He faces a very
difficult task and at this stage, instead of criticising him and
making his task more difficult, I think we should be more supportive.
The finance minister's is the loneliest job in the country.
You can't really say that the economy is in a mess and then
absolve everybody from the blame.
I think the problem is one of political uncertainty. Business
people are not sure where this 13-party coalition stands on many
of the issues or on the policies that it will follow. The Left
says one thing, the finance minister says another.
You can't run the economy effectively when there is this kind
of uncertainty.
There are other uncertainties too. We can't find a government
for our largest state. People are not sure how the political situation
will develop over the next year.
Apart from the uncertainty, there is an unwillingness and inability
to invest. Some people tried to raise money through GDRs and failed.
Others counted on the domestic stock market and found that the
climate was not favourable for a new issue.
At the same time, banks are cutting back on lending. So even if
you want to invest, there is no money.
Do you think that the finance ministry can't see this?
The problem is not that they don't know what to do. It is
that they are not able to do it. On so many issues, such as petrol
prices, the finance ministry has been willing to take hard decisions
but the political compulsions of a coalition such as this one
are that they are not able to go ahead.
That is why the world thinks that reforms have stopped. And you
know, they will not wait for us.
The future
Do you see yourself as a politician?
I am in politics.
That's not the same thing.
What's the difference?
You were in politics as a technocrat. You were appointed to
do a specific job.
I think we are going to need more technical people in government.
You can't expect a generalist to understand the complicated world
of financial engineering and derivative.
I regret to say that most of our politicians have no competence
to deal with these things. Nor is there a willingness to learn.
I remember when I was a student, James Callaghan, who was Britain's
shadow chancellor of the exchequer, came to Nuffield College for
one year to study economics. He took tutorials along with us.
There is no such enthusiasm for learning here. But if you go to
East Asia, you find that politicians there are very technically
competent and have the necessary expertise. Our politicians are
at a disadvantage there.
What about the IAS? Doesn't the same principle apply?
India runs because of the IAS so I don't want to belittle
their contribution. But as the world gets more technical there
is more and more need for specialists. Generalists have a more
limited role to play.
I think that we need professional inputs. IAS officers also need
specialised training.
Coming back to politics. Are you a politician?
I suppose the answer is yes.
Would you like to be finance minister again?
No. I don't think one should go back.
Any other portfolio?
Yes. Several. I think I would do a very good job as human
resources development minister. I would enjoy that ministry.
I would like to handle energy. The creation of a telecommunications
framework for India also excites me.
But I'm most excited by human resources and by education.
So, you are a full-time politician now.
I've always said I am in politics.
Is that why you joined the attack on Narasimha Rao?
I have clarified this. I am not part of any group in the Congress
and nor do I want to be. What I said was that there was no system
in the Congress whereby we could cope with the charges that were
leveled against many leaders. This is not healthy for a party
and so we should have some way of responding. That was what I
meant by the Caesar's wife remark.
All right. The million dollar question which I've saved for
the last. Do you want to be prime minister?
Who does not want to be prime minister?
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