For almost a decade, Dr Manmohan Singh has failed to deliver the goods when it comes to decent economic policy making governed by common sense. Given his background and past experience, this has come as an unpleasant surprise to all Indians. This coming budget is perhaps his last opportunity to stamp his authority and secure his place in history. He can still remain silent; but his policies must do the talking for him
“The art of leadership is saying no, not saying yes. It is very easy to say yes.”
“Leadership is about solving problems. The day soldiers stop bringing you their problems is the day you have stopped leading them. They have either lost confidence that you can help or concluded that you do not care. Either is a failure of leadership.”
“This light of history is pitiless; it has a strange and divine quality that, luminous as it is, and precisely because it is luminous, often casts a shadow just where we saw a radiance; out of the same man it makes two different phantoms, and the one attacks and punishes the other, the darkness of the despot struggles with the splendor of the captain. Hence a truer measure in the final judgment of the nations. Babylon violated diminishes Alexander; Rome enslaved diminishes Caesar; massacred Jerusalem diminishes Titus. Tyranny follows the tyrant. Woe to the man who leaves behind a shadow that bears his form.”
This is the thirteenth time in 13 years that I am starting the presentation of my Alternative Budget. Yes, my friends and dear readers, it has been 13 years since I first presented a set of suggestions to the then Union finance minister and branded it as an Alternative Budget (of course Dr. Malay Chaudhuri – the Founder Director of IIPM – had been writing budget alternatives for many years before that and our jointly authored book, The Great Indian Dream, also deals with the same in a great detail). There have been a few, rare occasions when finance ministers have unveiled proposals that have made me hopeful about the future of India. On most occasions, the budgets have been a series of fatuous statements and flogged-to-death proposals that have done virtually nothing to make a difference to the fundamental problems that confront India. But I don’t need to repeat and rehash a list of those proposals since every Indian with some knowledge of economics and some common sense knows that budgets have been a spectacular and persistent failure when it comes to solving India’s problems.
But there is something poignant about 2013. Both the headline of the story: His Last Chance and the three quotes I have borrowed hold a particular significance for our Prime Minister Manmohan Singh. When he became prime minister in 2004 after Sonia Gandhi refused the pleadings of her Congress sycophants, Dr Singh came with unparalleled experience in matters pertaining to administration and economics. After all, wasn’t he the man who uncaged both the Indian tiger and the elephant in 1991 through a series of bold and path breaking measures in his first Budget as finance minister? Wasn’t he the man who had already served the Government and the nation in a large variety of administrative duties? After all, wasn’t he the ultimate insider who knew how the country is run and what bold steps were required to propel India towards a sustained 10 per cent per year GDP growth rate? Most important, wasn’t he the best person then who understood how sloth, red tape and a complete lack of accountability in the bureaucracy and the administration were crippling a million Indian dreams? Was it any surprise then that many of us (now foolishly in hindsight) expected at least some substantial steps ahead – if not a 1991 like revolution – in the management of the country and the economy?
Is it any surprise that we have been bitterly disappointed and feel completely let down? Allow me to remind you of the first quote in this write up, attributed famously to Tony Blair. It talks about leadership being the art of saying no. Dr Singh has repeatedly failed to say no. He has failed to say no to people like A Raja and Suresh Kalmadi who are alleged to have indulged in unprecedented corruption. He has failed to say no to people like Lalu Yadav who used their clout in 2005 to topple the democratically elected government of Nitish Kumar. He has failed to say no to some really crazy and harebrained schemes cooked by Jholawala members of the National Advisory Council. In almost all cases that really matter for the future of India, Dr Singh has failed to say no. He has repeatedly failed this test of leadership.Now let’s go to the second quote, given by Colin Powell. Using military analogy, it says that soldiers will not come to you with their problems if they think you are incapable of solving them and if they think you don’t care. Dr Singh, you have clearly proven to be incapable and you have been so tight-lipped, reticent and mysteriously silent over the last almost nine years that none of us know exactly how much you care. The third quote, from Victor Hugo, is the most compelling and devastating. It talks about how history judges the legacy of leaders. There is no doubt that Dr Singh still carries the aura of unimpeachable integrity and personal financial honesty in public life. But of what use is that integrity and honesty when history will not only judge the UPA as the most corrupt, but also the most arrogant, unresponsive and repressive when it comes to dealing with opposition of all hues? Let me give you another analogy. Imagine Dr Singh as the principal of a college. As principal and an individual, his integrity is beyond question. So is his experience in managing the affairs of the college. But what if other teachers in the college are openly selling exam question papers to rich students for a profit, and even selling off furniture, library books and laboratory equipment belonging to the college? Of what use is your personal integrity to students of that college, except the privileged few and the criminally inclined who can bribe or browbeat their way through? Sad, but most Indian citizens are like hapless students of that college. Now, they have begun to question both his integrity and his timidity.
And yet, common sense says that there must be a lot of intelligence, a lot of pride, a lot of self respect and a sense of duty in that man. Surely he knows that he will be the longest serving Prime Minister of India after Jawaharlal Nehru and Indira Gandhi. Surely he knows that both of them, as also P. V. Narashima Rao and Atal Bihari Vajpayee have left behind legacies that may be controversial but powerful legacies nevertheless. Narasimha Rao’s track record will remain tarred with the Babri demolition and the Harshad Mehta scam. But history will judge him, and not Manmohan Singh, as the leader behind the path breaking economic reforms of 1991. The track record of Vajpayee will be tainted with the 2002 riots in Gujarat and his government’s capitulation to terrorists in the 1999 hijacking. But history will judge him, and not Manmohan Singh as the leader who took relations with America to a new strategic level? Does Dr Singh want to be a Prime Minister who served for ten successive years and failed to leave behind a durable legacy? Surely, there must be some ego in the man, some desire to be remembered fondly, if not very favourably by history.
And it is not as if he does not have options and choices. Let’s first eliminate the options that he doesn’t have and those he shouldn’t exercise. In the first category comes politics. Now, even a school student knows that Dr. Singh is Prime Minister because Sonia Gandhi gave him the job. All of us know he remains PM only as long as Sonia Gandhi desires so or thinks it is in her and her family and party’s interests. So disengaged has this Prime Minister been from the rough and rumble of politics that he has chosen not to contest Lok Sabha elections. Do remember: even the late I. K. Gujral, who was himself no grassroots politician, contested Lok Sabha elections and won when he became Prime Minister.
This single act of running away from battle will forever mar the legacy of Dr. Singh in the political arena. In any case, with Rahul Gandhi being anointed as the next leader of the party, there is not much that Dr Singh can do. He also knows that he will not be the Prime Minister again even if the UPA somehow conjures up some magic and wins another term in the 2014 Lok Sabha elections.
Perhaps that awareness has been motivating him to try and leave a legacy behind in another arena. Put simply, Dr. Singh wants to be the Prime Minister who overcame all obstacles and actually managed to normalize relations with Pakistan. That has been his driving motto since 2009 and he and his advisors and band of peaceniks have offered every possible olive branch to Pakistan. They have actually bent over backwards to make Pakistan a normal neighbour, if not an ally and a friend. But like all peaceniks before this bunch, they have repeatedly failed in their efforts. And they will keep failing as long as the “deep state” in Pakistan remains convinced that it can control Pakistan as long as India remains the eternal enemy. Dr. Singh must not forget that the United States will disengage from Afghanistan in 2014. And he must not forget bitter lessons of history. The insurgency in Kashmir started just a few months after the Soviet Union withdrew its troops from Afghanistan in the late 1980s. Many Jehadis who were busy in Afghanistan and the north west of Pakistan then turned their attention and energy into liberating Kashmir. Something similar is bound to happen in 2014.So I beg of Dr Singh to abandon his foolish dreams of leaving behind a legacy of good relations with Pakistan. India simply cannot afford such romantic folly.
So what options does Dr. Singh really have? The signs have been visible since the summer of 2012 and he must grab the opportunity with both hands. Since 2004, Sonia Gandhi and her band of Jholawala members of the NAC have been dictating economic policy. The policy has been simple: just keep dishing out welfare schemes for the poor and to hell with common sense economics. I hate saying this: but not a single major step to accelerate economic growth has been taken by the UPA government since 2004. But the chickens have started coming home to roost. Our GDP growth rate, which remained mostly in excess of 8 per cent a year during the first decade of this century, has crashed. Latest estimates indicate that the GDP growth rates fiscal 2012-13 will be a dismal 5.4 per cent. Almost all analysts are unanimous in saying that the growth rate in the next year will also be around 5 per cent. Let us do some basic number crunching to realize how devastating this decline in growth rate has been. I have always maintained through 13 years of my alternative budgets, my books and other write-ups and speeches that the Indian economy can grow in excess of 10 per cent a year on a sustained basis. Basically we are missing out on about 5 per cent of GDP growth that we could have achieved. The GDP of India is now at about $2 trillion. 5 per cent of that works out to $100 billion. So in just two years, the Indian economy has lost potential GDP – or income – worth $200 billion. That kind of money would have financed most welfare schemes for an entire generation. The lower growth has also resulted in lower than expected tax collections. It has also resulted in unmanageable and unsustainable fiscal deficits. Luckily for India, Sonia Gandhi seems to have realized in 2012 that there simply is no money with the government to throw at poor people in the name of welfare schemes named after members of her family. This realization resulted in the half hearted attempts at reform that were carried out in the second half of 2012 and subsequently by raising the price of diesel and LPG, by allowing FDI in retail and civil aviation and recently by hiking railway fares. I have been crying myself hoarse for about 13 years to the effect that diesel prices must be increased to a point where it is no longer subsidized. I have been repeatedly saying that a diesel price hike will not lead to massive inflation. I am happy to see that members of the UPA government are now taking pains to explain that very logic.
Quite clearly, now that Sonia Gandhi seems to have given the green signal, there is a window of opportunity for Dr. Singh to finally do what he was expected to do since 2004. And do remember, the return of P. Chidambaram as Union Finance Minister after Pranab Mukherjee became the President was another signal by Sonia Gandhi that she is ok with pragmatic and liberal economic policies. My humble request to both Dr. Singh and Chidambaram is not to let this golden opportunity be missed by presenting yet another budget loaded with welfare schemes for the poor and populist measures aimed at the Lok Sabha elections of 2014. By all means dole out welfare schemes; I have repeatedly stressed their importance in the last five or six alternative budgets. But please also take steps and announce measures that will take the Indian economy back to the path of sustained high growth.
Back in 2008, when I presented my Alternative Budget and titled it as Ban the Budget, I had argued that budgets had become meaningless exercises because finance ministers and governments were not leveraging the budget to make fundamental changes. I had argued that the budget is such a powerful instrument in an economy like India that it can actually fundamentally change the nature and quality of governance in the country. Just recall how just one budget presented by Dr. Singh as Finance Minister in 1991 changed the destiny of the Indian economy. Also remember that for all its flaws and all the corruption and plunder, the Rural Employment Guarantee Scheme has actually resulted in big increases in real wages and real consumption in Indian villages. So the first step is to identify those selected policy changes or budget allocations that can make fundamental changes.
This year, the fundamental steps needed are crystal clear. In 2009, I had created a furore by presenting my Alternative Budget with a headline: Khao Aur Khilao Budget. Apart from being thought provoking and provocative, my purpose was to highlight the fact that how poor governance and corruption at every level had negated all the good intentions – if there were any – and all the policies of the government. Corruption can kill dignity and kill dreams with impunity. Just recall the horrific gang-rape and murder of the 23-year-old girl in Delhi that sparked such a huge nationwide outrage.
The simple fact is that the dastardly crime was the direct consequence of corruption. First, there is corruption in the transport department of Delhi that allows such predatory, unlicensed and unregulated buses to run by taking bribes. Second, there is corruption in the Police department where it is the norm for traffic policemen to take bribes and allow unlicensed buses to roam freely. The hard fact is: the disgrace of December 16 would not have happened if corrupt transport department officials had not let that bus run illegal services. And if corrupt traffic cops had stopped and seized the illegal bus instead of taking a bribe and letting it ferry passengers at will. This is not just the story of Delhi; it is the story of every state, city, town and village in this country.
And why is corruption so rampant and why is no one able to make a dent on it despite so many pious proclamations? The reason is that our judicial and administrative systems have virtually collapsed. In 2011, the title of my Alternative Budget was A Budget for Rahul Gandhi. Please allow me to quote at some length from that document to get a feel of what I have in mind when I say this is the last chance for Dr. Manmohan Singh.
“But before I start presenting my budget proposals, let me share something that we all know. Corruption is flourishing in India because the corrupt are more likely to get away with it. It is deeply sad to note that 1 per cent is allocated by the central and state budgets for the judiciary. In the Ninth Five Year Plan, the government allocated Rs.385 crore for the judiciary. That works out to 0.078 per cent of total plan expenditure … In the Eleventh Five Year Plan, the allocation was “generously” raised to Rs.1,470 crore. As a percentage of total plan expenditure, things haven’t improved at all. These figures are so laughably small that I often wonder how the judiciary functions at all”. In the same document, I had quoted statistics which indicated that USA had ten times more judges per million people than India. It is a similarly depressing story when it comes to police forces in India. Let me quote from the statistics released by the National Crime Records Bureau in 2010: “Thus the civil police strength in position was 75.6 per cent of the sanctioned strength and 24.4 per cent of the posts were vacant … the proportion of women civil police to total civil police was 1:20”. There were more shocking revelations. The total expenditure on police forces in India is less than 0.5 per cent of GDP. India has just about 140 policemen for every lakh of population, with the numbers dipping to below 70 in the poorer states. In Europe and the United States, they usually have at least 400 policemen for every lakh of population.
So my main proposal in this last chance budget and my suggestion to Dr. Singh and Chidambaram is crystal clear. In my 2011 budget, I had proposed an allocation of Rs.6,000 crore each year for five consecutive years to increase the strength of the judiciary and its effectiveness. But there is huge momentum and popular support right now for drastic and dramatic reforms in our judicial and administrative machinery.
Apart from the above as I have often stated in the past, the only way to reduce corruption in India is to make the judiciary more effective. Till the corrupt remain convinced that they can either escape punishment or delay it indefinitely, corruption will continue to increase. The one and only solution for corruption is a functional judicial system. Corruption and greed are globally prevalent, yet it touches far less lives in the USA than in India simply because the American judicial system is functional and ours is dysfunctional. As I just wrote, in America, they have ten times more judges per million people than in India. If we are to try and achieve such standards we need to have about 100,000 more judges. It sounds huge but is surely achievable in a span of five years. And to have 20,000 additional judges per year, we have to budget for an additional amount of approximately Rs.6,000 crores per year, assuming that the expenses around a judge and his office assistants put together is definitely not more than Rs.30,00,000 per year.
In the event, I propose that expenditure on judiciary and police forces be increased to 1.5 per cent each of GDP. But as we have often seen, merely increasing expenditure is never a solution in corrupt India. I would set aside a minimum of Rs 6,000 crore to immediately set up special fast track courts that would try cases, specially those of corruption. I would hire experienced lawyers and judges who have retired recently to wear their robes again. These courts would try corruption cases against senior government officials and politicians. Any member of the public can use the RTI Act to gather incriminating information and file complaints against officials in such cases. Once activists, citizens and whistle blowers bring forth their formal complaints in front of these special fast track courts, there would be no requirement of obtaining a sanction to prosecute such officials and politicians from the “appropriate authority”. The courts would be required to complete the hearings and deliver their verdicts in one year. If convicted, the politicians and senior officials must be forever barred from public life and all their assets seized. In vase of frivolous complaints or complaints meant to harass, severe punishments must be imposed on the complainants so that only genuine complainants and whistle blowers are encouraged to go after the corrupt. But the operative word here is senior officials and politicians. If a bunch of senior officials and politicians are convicted by these special fast track courts, a huge message will go out to all corrupt people in the country. Even if all such special fast track courts manage 100 notable convictions in a year, they would have done their job. It is only the fear of punishment and a jail sentence that will deter the corrupt in this country. And through these special fast track courts, the accused will get all opportunities to defend themselves and their actions. And please do not say that India does not have the resources to spare Rs.6,000 crores a year to set up and operate these special fast track courts on an immediate basis. If former President Pratibha Patil can spend Rs.18 crores on just one foreign trip, surely there is enough money going around to implement this decision.
This one decision will also help Dr. Singh, Chidambaram and the UPA with their so called trump card of direct cash transfers based on the Aadhar or the Unique Identity System using biometric technology. In my 2009 Khao Aur Khilao Budget that generated so much controversy, I had proposed the allocation of Rs.2,000 crores for a unique identity card scheme that will immensely help poor Indians. It is a rare suggestion of mine that has actually been implemented because the former CEO of Infosys Nandan Nilekani was actually hired to lead an effort to deliver such smart cards to all Indians. Like everything else in India, there seem to be many glitches with even this smart card scheme. But I firmly believe that when our special fast track courts actually start delivering guilty verdicts, we would see many glitches and leakages of this scheme actually disappear.
I won’t go into the nitty gritty of the other proposals that I have in mind for Dr. Singh and Chidambaram. You can access my last alternative budget on the website of our publication The Sunday Indian (http://www.thesundayindian.com/en/story/a-budget-for-rahul-gandhi/71/30890/
) and get a fairly good idea of my suggestions over the years in the section titled ‘Key Resource Allocations’ and onwards. In any case, I have been repeating them for more than 10 years. But I must mention a few that are not only close to my heart, but also critical for the future of India. In 2010, I had presented a budget with the headline: A Budget for Three Idiots. The central theme of that Budget was primary and secondary education. India will never reap any demographic dividend unless there is a drastic overhaul in our education system. Apart from a big increase in budget outlays for education, I had proposed an inventive scheme for school teachers and principals whose students delivered excellent results. My proposal, was simple: a Rs.1 lakh a year cash inventive for teachers in whose schools students not only “passed” to the next level but also remained in the school till their “board exams”. Economics is based upon common sense and incentives, and I am convinced that these incentives will encourage teachers to actually attend schools and teach their students. In the same budget, I had also proposed that NREGA funds be utilized to build actual schools in villages with concrete buildings and bathrooms. This would have a generational impact on the education system. I had also proposed a massive increase in scholarships to all poor students who want to pursue college or professional studies after passing out from school. Smart cards based on biometric technology will come in very handy in identifying these students.
The surprising thing is: these are very doable things. I mean, we can plan to send an Indian to the moon by 2020; surely we can do these simple and basic things. So my request to Dr. Manmohan Singh is very simple and very clear: for nine years, you have carried on with the tag of being a non performer and a non leader. You also know that there will be no more budgets with you as Prime Minister after this 2013 exercise since the one presented in 2014 before the Lok Sabha elections would be a vote on account. I appeal not just to your sense of duty and patriotism but also to your sense of history and your ego. This really is the last chance for you to redeem yourself.