The Hindu Business Line : Technocrats ignore political realities

Running a country is different from running a corporation. The crucial difference is politics. Politics is about power relationships; it is about economic ideology as well. Technocrat Dr Montek Singh Ahluwalia could have avoided the foreign experts row had he remembered these truisms, says Paranjoy Guha Thakurta.

THE Planning Commission Deputy Chairman, Dr Montek Singh Ahluwalia, could have easily avoided the controversy over appointment of outside experts to the now-disbanded consultative groups of the Planning Commission had he been politically savvy.

Now that the heat and dust raised by the appointment of the so-called foreign experts in consultative groups constituted by the Planning Commission have subsided with the Government's decision to disband these groups altogether, it would be worthwhile to reflect on why this entirely avoidable controversy was raked up in the first place and why it required the intervention of the Prime Minister, Dr Manmohan Singh, before tempers cooled.

The short message that has emerged out of this unseemly fracas is that the use of technocratic means to deal with economic policy issues is fraught with dangerous consequences if political realities are ignored.

Was the hue and cry over the appointment of representatives of multilateral financing agencies such as the World Bank, the International Monetary Fund and the Asian Development Bank, and multinational consultancy firms such as McKinsey and the Boston Consulting Group in the Planning Commission's consultative groups largely the outcome of the ideological inclinations of one individual, namely, Dr Montek Singh Ahluwalia?

In other words, as The Hindu editorialised on October 2, is the Deputy Chairman of the Planning Commission turning out to be "a millstone around the United Progressive alliance government's neck," is he indeed the "author of the extended controversy" and is he the person who ended the controversy by dissolving the 19 consultative groups "by a diktat that is apparently the work of Dr Ahluwalia's king-sized ego"?

It is hardly a secret that the Planning Commission's Deputy Chairman was employed by the IMF before the Prime Minister — who looks on him as a close confidante — decided that he should be anointed his No 2 man in the Yojana Bhavan — a post typically held by politicians.

The Planning Commission itself and its Deputy Chiarman are being accorded greater importance in economic policy formulation than in the recent past. Long before the former West Bengal Chief Minister and veteran Communist Party of India (Marxist) leader, Mr Jyoti Basu called him a "World Bank man", Dr Ahluwalia had done a stint with the Bank at its headquarters located on Washington D.C.'s 19th Street during the late-1960s and the early-1970s.

Where he obviously went wrong and was perceived to have overstepped his limits was when he told journalists accompanying the Prime Minister to London that the outside consultants would remain in the consultative groups. This seemed contrary to what the Prime Minister had earlier stated to Left leaders, which was that the issue would be discussed and resolved after he returned from his trip abroad.

Then trouble broke. A group of Left-leaning economists as well as representatives of multilateral agencies decided to resign from the membership of the consultative groups. Eventually, Dr Ahluwalia had to bend though he sought to put up a brave front by working out a "face-saving formula" by which all the consultative groups were dissolved and the Commission went back to its "earlier practice of consulting individuals separately" as part of the process of the mid-term appraisal of the Tenth Five Year Plan (April 2002 to March 2007).

Dr Ahluwalia would surely recall the difficulties his mentor, Dr Manmohan Singh, had to face in 1991 and 1992 when he had to convince his then political opponents that he had not compromised India's national economic sovereignty by obtaining a $5-billion structural adjustment loan from the IMF.

As Finance Minister in the P. V. Narasimha Rao government, Dr Singh had to argue in favour of the Fund's typical prescriptions for the ailments afflicting the Indian economy at that time; this included the three `D's of deflation, devaluation and deregulation.

Many observers had felt then that Dr Singh was not exactly overjoyed slashing capital expenditure on health-care and education to adhere to the IMF's conditionalities, but had no choice in the matter. It should also be remembered that the much-talked-about policies of economic liberalisation took a backseat after 1992. Moreover, the government did try and subsequently step up social sector expenditure.

The situation is very different today. The Congress-led UPA cannot afford to antagonise the Communists for the simple reason that the very survival of the government depends on support from the 60-plus MPs belonging to the Left.

Dr Ahluwalia's actions are particularly surprising since he surely knew better than to show up the Bank and the Fund. Certainly, he was aware of the fact that the Left perceived the Fund-Bank policies to be influenced by advanced capitalist countries led by the US. Why, then, did he do what he did?

Did he think he would get support at the risk of jeopardising the existence of the government? Dr Ahluwalia ended up embarrassing the government and his guru — actions that could have been easily avoided.

In a letter dated September 11 to various leaders of Left parties, he had claimed that the consultative groups would not be "committees of outsiders", that there was "enormous expertise" outside the government and that it was necessary for the Planning Commission to make itself aware of the views of these experts. Dr Ahluwalia said the Commission would not be able to "do justice" to the mid-term appraisal if it relied solely on one set of civil servants commenting on the work of another set of civil servants. He seems to have tried a conciliatory approach when he added that the members of the consultative groups would represent a "large spectrum" of experts — not just from multilateral agencies and international consultancy firms — but from trade unions as well, including those supported by the Communist parties.

Dr Ahluwalia added: "Representatives of the World Bank and the ADB have been included in... these groups that deal with areas in which these agencies are actively involved in supporting Central government or state government projects... By including individuals from outside the government in the consultative groups, we are not in any way handing over to them critical decision making involved in the mid-term appraisal on policies and policy corrections that need to be introduced to achieve the objectives laid out in the national common minimum programme... we recognise fully that the individuals whom we hear have their own agendas, but I would like to assure you that we will subject the views expressed in our consultative process to careful professional scrutiny".

Moreover, he stated that the multilateral institutions "in any case interact regularly" with Central and State government agencies and "this has in the past also included the Planning Commission".

These arguments failed to convince the Left. Mr A. B. Bardhan, general secretary, Communist Party of India, asked that while "one can certainly informally consult and interact with as many experts as one wishes... why institutionalise the process by including representatives of such foreign institutions in regularly constituted panels?"

The CPI(M) Polit Bureau issued a statement on September 18 that read: "The needless controversy created by the inclusion of representatives of the World Bank and other international agencies in the consultative bodies of the Planning Commission shows a lack of awareness of the popular feelings in the country."

As Dr Prabhat Patnaik, Professor, Centre for Economic Studies and Planning, Jawaharlal Nehru University, wrote in a newspaper article (Indian Express, October 2): "Having their (meaning World Bank, IMF and ADB) representatives on Planning Commission bodies... constitutes a step, no matter how small, in the direction of undermining the sovereignty of the Indian state. True, de facto the World Bank and the ADB have been very influential in Indian policy-making, but having them on Planning Commission bodies would be a de jure abridgement of sovereignty; and the transition to this de jure situation certainly constitutes a leap."

Dr Patnaik added: "What has been particularly remarkable about this whole episode is the attitude of a section of the media and of the elite towards those who have opposed the inclusion of these representatives in the Planning Commission committees. Apart from personal innuendoes and meaningless questions like `why are these people afraid of foreigners?', the issue has been presented as an instance of Left intransigence. This plays down the question of the sovereignty of the nation-state which is involved in the inclusion of these representatives and which should concern everyone."

The UPA Government can afford not to pay attention to what Mr George Fernandes, convenor of the National Democratic Alliance, and certain ideologues of the Rashtriya Swayamsevak Sangh are saying. But the Government cannot ignore the complaints of the Left even it wants to.

Running a country is different from running a corporation. The crucial difference is politics. Politics is about power relationships; it is about economic ideology as well. Technocrat Dr Ahluwalia would do his government and himself a favour if he remembers these truisms.

(The author is Director, School of Convergence and a journalist with over 27 years of experience in various media - print, radio, television and the Internet. He can be contacted at paranjoy@yahoo.com.)