The Hindu Business Line : CMP: What face the reforms?

The new Government's Common Minimum Programme promises reforms with a human face. But this is easier said than done, as implementation would encounter problems political and fiscal. Sharad Joshi examines the CMP, putting it in historical persp ective.

THE renunciation of the Prime Ministership by Ms Sonia Gandhi and the installation of the United Progressive Alliance (UPA) Government with outside support of as many as 63 MPs of the Left Front is, by any standards, a historic event. The UPA succeeded in forging a Common Minimum Programme (CMP) in a surprisingly short time. It is, as can be expected, a wish list of all the constituents of the UPA.

Three strands run through the CMP: One, the anti-`BJP'ism of the Congress; two, the radical anti-reforms and anti-globalisation of the Left Front and of the caste-based parties; and, third, the inevitability of reforms and liberalisation. The product is, what the CMP calls, `Economic Reforms with a human face.'

No pure options

The fact is that India had never seen an epoch of pure economic reforms. Nor of socialism with all its rigour. It is an essential element of the Oriental mindset not to accept any dogma. We do not see the world as divided between white and black. We see many intermediate shades. Going for any logically pure option does not suit the Indian mindset.

We accepted the easy part of the Gandhian way; Satyagraha was a softer option than bombs and guns. The strict mental and spiritual discipline of the Gandhian path was beyond most people with the consequence that the freedom movement deviated away from the Gandhian path every now and then. But after Gandhiji's death, his village-based economics was all but forgotten.

The Gandhian economics with its emphasis on rural problems and distrust of all state institutions was anathema to the aspirations of the affluent mindset. The only manner in which the affluent classes could garner the benefits of development was from the commanding heights of the public sector under an all-pervading state controlling the whole economy.

The Soviet example was often cited but without spelling out the rigours and risks involved. We opted not for socialism but a socialistic pattern of society. The word `socialism' was used only much later by Indira Gandhi when she had already started drifting from nationalistic planning to allowing foreign direct investment.

Liberalism, not new

Liberalism in India pre-dates Dr Manmohan Singh. Mahatma Gandhi was opposed to all state interference. The post-1980 farmers' movement that commands massive peasant support demands freedom of access to market and technology. Indira Gandhi took the formal initiative in the Suzuki-Maruti case. Mr V. P. Singh's Budget under Rajiv Gandhi was a clear indication of the beginning of the end of Nehruvian socialism. Yet, none dare say today that that epoch is over and gone. A large number of thinkers continue to hold that what Nehru did in his epoch was the right thing to do then just as what Dr Manmohan Singh started under Mr P. V. Narasimha Rao was the right thing in 1991.

History does not care for such obfuscations. People at large recognised that the socialist dream was irreparably broken. Nobody said it in so many words. Nobody even tried to initiate a debate on the shape and the dimensions of the new era. It looked as if the nation had suddenly altogether lost interest in the economic agenda. A people bereft of hope for the future and little consolation in the present inevitably fell back on the past.

The history of India had its glorious aspects as also its horrendous inequities. Political parties and schools of thought developed that either glorified the past or emphasised the inequities of the past to propound a social programme for future. Thus developed the influence of the Sangh Parivar and the Hindutva, on the one hand and the Mandal forces on the other.

These two schools have dominated the Indian polity for quite some time. The National Democratic Alliance (NDA) under the leadership of Mr Atal Bihari Vajpayee managed the Herculean task of containing its extreme elements as also the anti-liberalisation Swadeshi brigade.

In terms of economic development, the performance of the NDA government compares favourably with that of any previous government including that under Mr Narasimha Rao and Dr Manmohan Singh. The NDA did put a shine on `India' but, as admitted by Mr L. K. Advani, not on `Bharat' with the result that neither was satisfied.

The NDA lost in all cities and most towns. The rural area in Maharashtra, Madhya Pradesh, Punjab and Haryana did endorsed the NDA but those in Andhra Pradesh, Tamil Nadu, Bihar and Uttar Pradesh delivered a resounding rebuff for reasons both social and economic.

During the electoral campaign, the Congress leaders had attacked the policies of disinvestment/privatisation, as also the growing unemployment and rising costs of living. The Left Front had attacked the NDA government on its globalisation programme and gone to the extent of demanding revocation of WTO treaties.

The human face

Yet, the UPA reiterates, in the CMP, its abiding commitment to economic reforms with a human face. The human face is to be provided in giving priority to spreading and deepening rural prosperity, to improving the quality of public systems and bringing about a visible and tangible difference in the quality of life of ordinary citizens.

Apart from this high sounding homily, does the CMP support the intent of providing a human face to economic reforms?

The CMP promises to enact immediately a National Employment Guarantee Act (NEGA) to provide a legal guarantee for at least 100 days of employment every year. If the employment guarantee schemes working in different parts of the country are any indications, the noble intent of the NEGA would only produce rampant corruption, unproductive projects and interference in agricultural labour market that could worsen the economic situation of above-subsistence agriculture.

There is a promise to revamp the functioning of the Khadi and Village Industries Commission (KVIC). The contribution of the KVIC to rural employment and industrialisation is small, considering the size of the problem.

The products of the village industries will need to be marketed aggressively, including in foreign shores, and the whole system of reservations for handlooms will have to be reviewed so that this sector does not unnecessarily enter into competition with the textile industry.

Similarly, the supply of yarn to the handloom sector will have to be based on open market cotton prices.

Easing farmers' finances

The CMP promises to ease the burden of debt and high interest rates on farm loans. This is a promise that was made by so many parties in their manifestos but never actually fulfilled. As for the agriculture sector, it may be said that if the UPA acts honestly on this one point, that would be giving the real human face.

The CMP promises minimum wages for farm labour as also comprehensive protective legislation for all agricultural workers. Minimum wage legislation has been in place for decades. In fact, in most regions the prevailing wage rates are much higher than the statutory minimum. Given the influence the Left has over the UPA, the words `protective legislation' sound an alarm.

There is a talk of systematically removing all controls that depress the incomes of farmers. But at another point the CMP speaks of improving the functioning of the Food Corporation of India (FCI) rather than its abolition plain and simple. Revamping the FCI cannot go with either fair farm prices or efficient public distribution.

The promise to protect farmers from imports, particularly when international prices fall sharply, sounds innocuous. In practice, it can lead to the sabotaging of the whole system of multilateral trade unless protection is given for a clearly stipulated time subject to specific conditions.

There is promise to ensure that dues to all farmers will be cleared at the earliest. Sugarcane farmers are specifically mentioned. Clearly, the drafters of the CMP had, in their mind, the massive arrears of cane price payments in the northern States. There is no mention of huge amounts due to farmers on account of shareholdings in and deposits, both refundable and non-refundable, with cooperative bodies.

Land legislation

The influence of the Left Front and the caste parties is seen in the provision for implementation of land ceiling and redistribution legislation and promise of reservations in the private sector. In fact, there is no crying need for reversal of the ceiling legislation; there is an urgent need for a legislation permitting at least operative consolidation of agricultural landholdings to extract efficiencies of scale.

Extension of reservation to private sector is clearly calculated to please the Mandal electorate. The private sector certainly has to make a contribution to the social causes. It is supposed to have discharged that obligation by paying taxes. Any other contribution that would affect the productive efficiency of the private sector would only be counter-productive.

The CMP could not have rejected reforms, much as the Left parties would have liked it. The stock market reaction has brought home to them that opposition to reforms is pointless.

The Common Minimum Programme of UPA uses the euphemism of `Reforms with human face'. In reality, it is more like `Reforms minus work ethics.'

(The author is Founder, Shetkari Sanghatana, and can be contacted at sharad@mah.nic.in)