Too Little Too Confused

The problem of being a Prime Minister is that he has to take decisions. But Manmohan Singh does not want to take decisions. When the files started coming to him, he deliberately decided not to act, he started making groups of ministers which came to be known as GOMs. He made Pranab Mukherjee the Head of more than two-thirds of these GOMs. While P. Chidambaram was holding the finance portfolio, Pranab became the head of such a GOM which was entrusted with the responsibility of getting the other GOMs to work because ministers were not giving adequate time to the GOMs. I am not aware of any recommendations made by a GOM being headed by Pranab, as he himself did not have enough time to take the deliberations of GOMs to its logical conclusion. How callously his own ministry worked can be gauged from the example of crisis related to inflation. He believed that inflation is a systematic approach; it’s a basket of goods. He never attacked inflation; rather he chose to attack the system. The Finance Ministry just could not figure out whether inflation was going up because of a paucity of commodities or increased liquidity. The reality is that India’s growth rate was stagnating along with the industrial growth, and an acute shortage of essential commodities was leading to inflation. Iron ore and steel are examples of how the government itself pushed up inflation due to its distilled wisdom. The government decided against exporting iron ore to China, which was earlier the most favoured destination for the mineral. Once it decided that, the government hiked the railway freight fare by 300 per cent. This surely blocked iron ore exports to China but the intelligent government that we have did not stop even for a while to think that this step will also choke the supply of iron ore to our own factories. This had an immediate adverse effect on our own production of steel at Tata and Rourkela, etc., and the heat was especially felt by those involved in mining and extracting the mineral. As a by-product of this misplaced wisdom, now we have become an importer of steel from China and this steel we are buying a higher cost. The same is the story with cement production; a bag of cement costing Rs. 50 was running at Rs. 400 a bag but the Finance Ministry could not tackle the problem.
Neither the government nor any agency associated with it – RBI included – know the exact amount of black money. The figures range from Rs. 4 to 30 lakh crores (the last figure was given by RBI). This differing estimation of various agencies of the government confirms that the Finance Ministry is not serious about black money. There is an interesting contradiction of Finance Ministry related to counterfeit currency notes in India. Counterfeits were, astonishingly, found in the very chests of RBI. CBI investigated this matter, raids were conducted, some were even arrested but what action was taken in this respect is known to none. It can be concluded that the Finance Ministry did not pay any attention to this issue. This is not a mere conjecture but it is a fact. When P. Chidambaram was the Finance Minister, he had said that every third currency note in India was counterfeit. It is suggestive of the health of our fiscal system and an insight into the efficiency of the Finance Ministry. Simply put, it does not act when it has to act.
Take for instance an example: one has two ways to pass an examination – by rote or by true knowledge. Both will yield the same results in an examination that puts up usual questions. The problem arises when the examination tests your wisdom and not bookish knowledge. In this case the person who has an in-depth understanding of the subject will pass, while the one who resorted to rote will surely fail. The latter seems to be the predicament of our administrators, government and ministers. So far they have been dealing with the simple questions as India faced simple and usual difficulties. Our IAS officers and Ministers have been solving these problems through rote. But now India is facing complex problems. We are facing difficult question, and they do not have any clue what to do. I am not saying that Pranab too is a student who believed in rote but his actions point to that. He behaves in strange ways: reduces CRR and increases liquidity in the market and inflation spirals. To control this he decreases SLR. He also imposed a 1 per cent tax on jewellery, while leaving the assessment of this tax to his inspectors; there was brouhaha against not the taxation but against the inspectors for assessment.
He coined for the first time, in any Parliament in the world, the term ‘sense of the House’. When Anna Hazare was taking the government on, Pranab used the ‘sense of House’ strategy and said that the government would pass the Lokpal Bill. He was the one responsible for conducting the matters in the House. The government either did not listen to the ‘sense of the House’, that is it did not pay heed to Parliament or the Lok Sabha and duped the people of the country – the House did not translate its own sense into action. The Standing Committee of Parliament that was looking after the Lokpal Bill was headed by Abhishek Manu Singhvi but he had to go because he was caught having promised a lady to pull strings and make her a judge, for which he had to resign. On the political front, Pranab showed immaculate proficiency in spin-doctoring. But as far as his initiatives on the economic front are concerned it seemed too little and too confused. Any way it is a matter of great relief for the country that Pranab is no more the Finance Minister.
Just after Pranab left the ministry, Prime Minister Manmohan Singh said that lifting the economy from rags needed an animal spirit. The Prime Minister did not clarify what he means by animal spirit. We are still waiting eagerly for the clarification.


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