Narendar Pani

Pushing reforms is no easy task

NARENDAR PANI | Updated on February 15, 2012

Mr A. Raja, unlike politicians of an earlier period, didn’t step aside when faced with the task of making telecom policy.

New Delhi's Westernised policymaking elite is under challenge from State-level political forces.

The UPA government's second term in office has been characterised by repeated failures to push through significant reform. It couldn't allow foreign direct investment in multi-brand retail, and it failed to push its Lokpal Bill through the Rajya Sabha. With the Tamil Nadu Chief Minister raising the banner of revolt against the Food Security Bill, it is by no means certain that even this morally attractive piece of legislation will go through.

It is easy to dismiss these failures as the result of poor political management of the regional party allies of the UPA. But that explanation ignores the reasons for the rise of the opposition from regional parties; it ignores the fact that two decades after it first introduced economic reforms, the Congress Party's method of doing so has come up against the federalism barrier.


The Congress has always had a centralised view of India's federal structure. When Jawaharlal Nehru was elected to power in a largely illiterate country, he believed it was his duty to tap a more educated — read Western-educated — elite for policymaking. He then used his vast political capital to push these policies through Parliament. No other Congress Prime Minister had that kind of political clout. Mrs Gandhi worked her way out of that predicament by taking the populist route of ‘Garibi Hatao'.

Mr Rajiv Gandhi tried to protect the right of the elite to make policy by distancing the policymakers from the elected representatives. Policymaking was to take the form of independent missions, led by individual icons like Mr Sam Pitroda. At the same time, the anti-defection law was brought in to ensure that once a directive was issued by the party leadership on a particular policy initiative, the MPs had to vote for it. While the rhetoric of the anti-defection law was to prevent destabilisation of governments, it was used to issue directives on specific policy initiatives.

Mr Narasimha Rao took this institutional structure forward by further distancing the elected representatives from policymaking. The entire process of economic reform was designed by Dr Manmohan Singh and some other economists, and pushed through Parliament with the stated or implicit help of the anti-defection law. In order to ease pressure from the MPs, the Local Area Development Fund was created to provide each Member of Parliament with resources that were to be spent on her constituency. With the MPs having no meaningful role in policymaking, their re-election depended primarily on what they did in their constituencies, and not really on any view that they had on policy.

This political and policy dualism worked very well, as long as the policy initiatives didn't directly affect the MPs constituents. Economic reform that led to high growth rates was all very well, as long as it provided the resources needed for programmes, like the Mahatma Gandhi National Rural Employment Guarantee Schemes (MNREGA), which the local politicians could associate with. It also helped that the reforms in, say, foreign exchange legislation, weren't a major part of the political debate in remote constituencies.


But two decades after the initiation of economic reform, this dualism is coming under severe pressure. The low-hanging fruits of reform have been plucked, and the government is being forced to move into territory that directly affects the political debate in local constituencies. FDI in multi-brand retail has been, rightly or wrongly, effectively projected as a measure that will hurt the small retailer. And since there are a large number of people from vegetable vendors to small shopkeepers who can be told their livelihood is at stake, it will be difficult to push through this measure without risking a major, even devastating, political fallout.

It is also proving to be more difficult to convince politicians who have come up from the grassroots to leave policymaking to the Westernised elite. Mr A. Raja didn't simply step aside when faced with the task of making telecom policy. While it is entirely possible that the courts will finally decide that he did divert public money to his personal fortunes and punish him for that, he isn't without a defence when it comes to the overall effects of his policy.

India's rates for mobile telephony are among the cheapest globally. This has contributed in no small way to enabling the weaker sections to tap the benefits of this technology, be it a maidservant trying to get in contact with her employer in cities or a farmer getting prices in a remote village. Mr Raja could well tell his constituents that if he had charged the additional Rs 1,76,000 crore for the licences, that the CAG said he should have, mobile telephony would have been kept out of the reach of the poor.

With the elite's monopoly on policymaking being threatened by more local leaders, the basic approach of the Congress to reforms is under intense pressure. It is no longer possible bring in reforms by stealth. It is also more difficult to get State governments to simply accept central guidelines for their programmes. Ms Mamata Banerjee dug her heels in over the Central Lokpal Bill, telling the States how their Lokayuktas should function. Ms Jayalalithaa has similar opposition to provisions of the Food Security Bill. Dr Manmohan Singh has promised that his government will work more efficiently in 2012. But it is difficult to see how that will happen, unless the Congress comes to terms with the fact that the old dichotomy, between a policymaking elite and the people's representatives, is nearing its end.

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Published on January 04, 2012
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