A K Bhattacharya: No instability, nor any roll-back

NEW DELHI DIARY

International investors, large sections of domestic industry and even experts have been expressing doubts over the stability of the new government and its resolve to stay on the reforms path. It is a coalition government after all, they point out.

Moreover, the Congress has no experience of running a coalition government at the Centre. Worse, the drama over the prime ministership has laid bare the inherent fragility of the government with a council of ministers whose loyalty will obviously be split between the prime minister and the Congress president, Sonia Gandhi.

The arguments on the question of reforms are somewhat different. The key point raised by them is that the Manmohan Singh government has coalition partners whose commitment to reforms is doubtful.

The Left parties can also apply brakes on reforms whenever they choose to do so, because they provide crucial support to the government, even though from outside. And finally, it is argued, the Congress itself has changed its approach to reforms.

How genuine is this concern? To understand this, it is important to recognise the changed context in which the Manmohan Singh government has been formed. It is naive to believe that the Manmohan Singh of today will approach economic reforms the same way as he did in 1991. Apart from the 13 years that have elapsed in between, the circumstances under which Dr Singh has come to South Block as India's 13th prime minister are radically different from those that obtained when he entered North Block in 1991.

As finance minister then, Dr Singh had few options. An unprecedented balance of payments crisis and fiscal indiscipline were staring him in the face. The government was on the verge of defaulting on meeting its international payments obligations. Its foreign exchange reserves had dwindled to less than a billion dollars.

So, what options could he have other than listening to those who would bail him out with some hard currency loans? And that's exactly what he did. He got the International Monetary Fund's commitment on a $2.2-billion standby loan in return for swift economic reform measures. On his part, Dr Singh fulfilled his promise of reforms at least in the first couple of years. As the finance minister of a minority government, he took a host of reformist measures that made him internationally famous as the architect of India's economic reforms.

But to expect Dr Singh to show the same speed in unleashing a series of economic reform measures immediately after assuming charge as the prime minister betrays a complete lack of understanding of the changed circumstances.

One, there is no economic crisis, even though nobody can deny the need for more reforms. But the absence of an impending crisis gives the government some elbow room for negotiations and political packaging. Two, the Congress has to be acutely conscious of the fact that it must take its coalition partners and supporters along while carrying out the reforms.

So, there may not be any big-bang reforms implemented at great speed. But it is hard to imagine that Dr Singh will roll back reforms. If anyone has any doubts, he should take a look at President Kalam's address to Parliament on Monday.

There are clear signs that Dr Singh is readying a new package of economic reforms that would take into account the political reality of running a coalition government.

All the right noises that the government needed to make on the reforms front were made through the President's address to the joint session of Parliament. Economic reforms under Dr Singh as the prime minister may be slow, but there should be no fear of a roll-back.

On the question of the stability of the Manmohan Singh government, two key factors should be kept in mind. A government can fall either due to internal problems or external factors. What could be the internal problems with the Manmohan Singh government?

Given his track record as the finance minister for five years, Dr Manmohan Singh is extremely unlikely to cause any discomfort or insecurity problems to his leader, Sonia Gandhi. He is a loyal partyman and will remain so.

He is unlikely to be influenced by the huge sense of power that is vested in him on account of his being the prime minister. As long as Sonia Gandhi has faith in Dr Singh, the government should be having a smooth run.

There are, of course, external factors that might upset such calculations. What if the Left parties decide to pull down the government? But will the Left parties ever do that? The Left parties have a virtually unblemished track record in supporting coalition governments.

None of the coalition governments at the Centre fell because the Left withdrew its support. And most importantly, the Left sees in the present Manmohan Singh government a viable alternative to a government led by the BJP. For the Left, the Congress continues to be a better option than the BJP.

So, the Left parties may continue to complain in public about how the Manmohan Singh government is going against the Common Minimum Programme. But they are not likely to pull down the government. It is clear that the Congress recognises this reality. Hence, you are likely to see the continuation of reforms, even though there would be renewed emphasis on anti-poverty and employment schemes.

akb@business-standard.com