Manmohan Singh the wrong target for “under achiever” tag

It’s open season for criticising India’s leaders. Time too, you might say – why didn’t the attacks start much earlier in the current government which has been failing for most of the time since it was elected in 2009.

Pranab Mukherjee, publicly regarded until a few weeks ago as the veteran politician on whom the government depended for solving its problems, is now billed as a disastrous finance minister who has damaged India’s economic growth and international image. The switch – which is broadly fair – came immediately after he gave up the finance job two weeks ago to stand for election as India’s president.

Time magazine this week has a cover story describing Manmohan Singh, the prime minister, as an “under achiever”. That is being seen as a major attack in image-sensitive India. It has generated condemnation from the Congress Party and massive tv coverage. Time is however a bit late with its article because Singh, 79, is now being billed in India as the government’s saviour. After being widely criticised as an ineffectual prime minister for a year or so, he is suddenly being lauded as the man who can wreak magic now that he is not fettered by Mukherjee’s political superiority and old-fashioned tax-and-spend protectionism and has himself taken the finance minister’s post.

Singh deserves some of the criticism because of the government’s lack of success and his own failure to assert himself and speak out about policies. His reputation has always been over-stated because he was not, as he is often billed, the architect of India’s 1991 economic reforms. He was the chief implementer of measures that were substantially prepared before he took office. More importantly, he was acting under the political guidance and protection of prime minister Narasimha Rao (1991-1996), who the Gandhis like to airbrush out of India’s history (slotting in Singh as the key reformer) because he did not kow tow to the dynasty in the early 1990s.

Singh is nevertheless a leading economist with a established record as a distinguished public servant, and it is unfair that his reputation should now be sullied when he is the prisoner both of his political boss, Sonia Gandhi, leader of the Congress Party and the governing coalition, and of the coalition’s troublesome regional partners who indulge in corruption and obstructionism for personal and political gain.

Sonia Gandhi generally escapes criticism by staying largely out of sight. Her son and heir apparent, Rahul, did the same until his disastrous performance in Uttar Pradesh state assembly elections earlier this year that showed the family’s born-to-rule approach to electioneering is losing its sheen.

Criticisms of both mother and son are however beginning to emerge, specifically because they believe that the path to future Congress Party election victories is to channel subsidies and funds to the poor, irrespective of how wasteful that can be, while discouraging growth-oriented economic reforms that might do short-term harm to the pro-poor image. That has meant that the Gandhis and Mukherjee have been broadly on the same page, harking back to the early 1980s when Sonia’s mother in law, Indira Gandhi, was prime minister and Mukherjee was her finance minister.

Because of that bond, along with opposition from coalition partners, Manmohan Singh has had no chance – so the Time magazine article is off-cue, as was relentless criticism of him last year in my old newspaper, The Financial Times. A different character might have tried to break through such logjams but Singh is a deeply withdrawn man with, as India Today magazine aptly points out, an “inability to communicate with friends and negotiate with foes”.

Now however the mood has changed and the Gandhis seem to be staying silent while Singh’s image is boosted in the media along with his two main reform-oriented advisers, C.Rangarajan, chairman of his economic advisory council and a veteran bureaucrat, and Montek Singh Ahluwalia, who runs the Planning Commission and has been at the centre of economic policy-making, and close to Singh, since the 1980s. A month ago, Ahluwalia looked lost and powerless, but now industrialists are beating a path to his and Rangarajan’s offices to push for reforms and project clearances, which is a good signal.

India’s international image has consequentially improved, but this is a fragile recovery. The rupee, which has lost nearly 30% of its value in the past year, picked up a week or so ago but is now slipping slightly. The country’s international business image has taken such a battering that tougher measures are needed than Singh and his supporters can probably manage.

Plans announced by Mukherjee in his February budget retrospectively to tax multi-national takeovers (despite explicit opposition from the prime minister) are being re-examined, and a more business-friendly image is being cultivated.

There is a lot of talk about allowing foreign direct investment (FDI) in supermarkets though it is unlikely to go ahead and would have little short-term economic impact, and an expected decision by Ikea to bring in furniture stores is being given massive media coverage. Some financial sector reforms might go ahead, along with allowing foreign airline investment in Indian aviation. But that will attract few airlines, whereas relaxing FDI limits in defence manufacturing and insurance, which would bring in foreign companies, will continue to be blocked by vested interests.

But all this is trifling compared with what is needed in the short and medium term to rebuild investment, raise fuel prices, sort out priorities for allowing land to be used for industrial development, solve appalling shortages of coal and power, cut wasteful subsidies and curb financial budget deficits.

These are tough areas for the reinvigorated Singh-Rangarajan-Ahluwalia trio to tackle. But until substantial progress is made, it is India as a whole that is the “under achiever”.

A slightly longer version of this article is on John Elliott’s Riding the Elephant blog at http://wp.me/pieST-1JN

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