NEW DELHI – Policy paralysis, governance deficit and economic regression – the corporate houses feel India’s economic reforms are stalked and that just reflected in the letter sent to U.S. President Barack Obama by the apex body of American corporate.
In a letter to Obama, the U.S. India Business Council (USIBC) voiced its disenchantment over the investment climate in India, “there is a “vacuum” at the Centre and political power is devolving to strong state leaders.” In a secret memorandum sent to the White House, it said, “What is apparent is that political power is devolving to strong state leaders, and the vacuum at the Centre is allowing forces in government to move on issues that are harmful to India’s investment climate.”
“The Compulsory License case, the Procurement bills, the effort to expand the Essential List of Medicines are all examples where there is little political benefit, which indicates that the bureaucracy has a hand in moving these initiatives,”, the USIBC Chairman Harold ‘Terry’ McGraw III, said in a letter to Mike Froman, deputy national security adviser to the U.S. President.
There are self-created vacuums at the central government – a curse in the UPA government which ultimately results in complete absence of responsibility or conscience. And India’s Chief Economic Advisor says major reforms are unlikely till the 2014 parliamentary elections. What are the vacuums in the UPA government?
First of all, there is a dead air between the Prime Minister Manmohan Singh and the UPA Chairperson Sonia Gandhi. “There is little communication on policy or politics – which is a dangerous thing when political power is with the party chief and governance responsibility with the Prime Minister,” says a Firstpost article. “What seems clear is that Sonia Gandhi is unwilling to discuss political issues with coalition allies (DMK, NCP or Trinamool), and without this Manmohan Singh cannot achieve coherence on policy,” R Jagannathan writes in Firstpost.
The second vacuum can be said to be the PM’s inability to deal with the powerful ministers, even from his own party. His policy of writing notes to his colleagues on different issues than talking to them directly damages the investment climate in the country and it only drags the already tedious process.
As the letter suggests, the bureaucracy has been cut loose to fend for itself and ever since the series of corruption charges like 2G and CWG broke out, every babu at the central government is trying not to make decisions for the fear of being pulled up in corruption cases.
“A huge vacuum is developing between the executive authority and various other constitutional arms like the courts or parliamentary committees or statutory bodies like the Comptroller and Auditor General (CAG),” the post says.
The gap between the government and the governed is appalling like never before. “Lack of action on big-ticket corruption is what forced civil society activists like Anna Hazare or Baba Ramdev or even the National Advisory Council of Sonia Gandhi to muscle into policy-making territory,” the article notes.
The gap between the centre and the state governments has been quite evident in many issues varying from the National Counter-Terrorism Centre (NCTC) and the Food Security Bill to the Goods & Services Tax (GST). There is undoubtedly a trust deficit between centre and states which can only be solved by greater dialogue and compromise on issues of national importance.
What’s the option left for the prime minister as he is assigned a post that is in reality a vacuum and doesn’t give freedom to think or act anything sensible? The answer is to resign in protest than holding on to the chair on the excuse of coalition compulsions.
In response to the fears of the U.S. business, Finance Minister Pranab Mukherjee said, “There is no vacuum in the leadership of the union government. There is a very powerful, strong, acceptable prime minister.”
Attend the spring meetings of International Monetary Fund (IMF) and the World Bank, Mukherjee said, “Reforms is a continuing process. It’s not that you can stop and go.” Referring to his meeting with the US treasury secretary, who had raised the US business community’s concern about certain retroactive changes in the Indian tax laws, Mukherjee said he had explained that the proposed changes were “not substantive, but only clarificatory in nature”.
On the legislative front, there are a couple of measures on the anvil and he would try to get parliament’s approval on three important bills to amend insurance, pension fund and banking laws either in the current budget session or the next one, he said.
Starting with the opening of the Indian economy in the 1990s, with changes in the industrial, foreign investment and foreign trade policies, India has continued on the reform path, Mukherjee said, unfazed by Chief Economic Advisor in the Indian finance ministry Kaushik Basu’s reported remark to a think tank here that major reforms were unlikely before the 2014 elections.