A K Bhattacharya: Where is the orchestra conductor?

NEW DELHI DIARY

Strange things are happening in the UPA government. Ministries seem to have shed their earlier inhibitions and are making no secret of their differences with each other. True, they are not issuing public statements about their disagreements. But they are not making any effort to resolve their differences, either, in a manner that there is no public embarrassment or controversy.

Railway Minister Lalu Prasad wanted the super-fast freight corridor project to remain under the administrative control of the Indian Railways. Planning Commission Deputy Chairman Montek Singh Ahluwalia was opposed to the idea. Rail Bhavan mounted a massive campaign arguing that if the freight corridor project was not under its control, there would be serious co-ordination problems. The matter was referred to a group of ministers. Eventually, the new project was decided to be implemented by a special purpose vehicle which would remain under the administrative control of the railway ministry. Neither Rail Bhavan nor Yojana Bhavan kept its differences a closely guarded secret.

Commerce Minister Kamal Nath has been promoting his pet project""special economic zones (SEZs)""with great enthusiasm. But Finance Minister Palaniappan Chidambaram is worried that SEZs will result in a substantial loss of revenue for the central exchequer. While Mr Nath has managed to get the proposed cap on the number of SEZs removed, the finance ministry continues to sulk. It has also decided to continue its battle against these zones. It now transpires that the finance ministry had actually presented before the recent meeting of the empowered group of ministers a note expressing its serious misgivings and fears that SEZs would cause a revenue loss of over Rs 1,70,000 crore over the four-year period ending 2009-10. The finance ministry note, which under normal circumstances would have remained a secret document, is now public knowledge.

The Planning Commission's approach paper to the Eleventh Plan is expected to get feedback and comments from experts and various bodies within and outside the government. But such feedback from the finance ministry has now taken the shape of a long letter from the finance minister to Mr Ahluwalia. And the letter is out in the newspapers. It sharply questions the assumptions in the approach paper and chides the Planning Commission for entertaining fears on the current account deficit front and for favouring a further slippage in the government's fiscal deficit reduction programme.

Even the Reserve Bank of India (RBI) has begun figuring in this drama of discord. It is by now an open secret that the finance ministry had a sharp difference of opinion with the central bank over the course of the interest rate regime. While the ministry did not favour a hike in interest rates, the RBI had a different view, as was obvious from its last quarterly monetary policy review statement. The finance ministry did not want to take this lying down and exercised its rights as the majority shareholder of public sector banks by asking them to review their decisions on hiking interest rates. Eventually good sense prevailed as most banks refused to roll back their interest rates. But after this incident, the RBI's differences with North Block have only widened. Meanwhile, the central bank has frowned upon the Planning Commission's attempt to relax the deadlines for fiscal deficit reduction, mandated in the Fiscal Responsibility and Budget Management Act.

Is this glasnost? Or is this democracy at work? Or are these the compulsions of a coalition government? Probably, neither of these diagnoses will be entirely correct. Yes, debates over public policies should always be welcome. But such debates can yield positive results only when these are held within the confines of a forum that is monitored and supervised by the team leader. And the team leader takes the final call in case the differences are not resolved through the debate. But what we have seen in the last few weeks is quite different.

Lalu Prasad and the Planning Commission fought over who should control the freight corridor project. The Planning Commission had good reasons in support of its contention. But the Indian Railways won because Lalu Prasad was politically more important for the survival of the UPA government. Special economic zones, many believe, are nothing short of a scam with industries using political clout and other skills to outdo each other in purchasing land from state governments at concessional rates. The finance ministry's revenue loss is also a genuine concern. But nobody seems to care about these issues in the forums created to debate them. No wonder, the differences are coming out in the open through the media.

The differences between the RBI and the finance ministry over interest rates or those between the Planning Commission and the finance ministry over the fiscal deficit reduction programme also highlight the absence of an effective orchestra conductor, who could ensure that different members of a team play their roles cohesively. This is ironic because most of the protagonists in the current drama were also part of the North Block team that initiated the first phase of reforms in the early 1990s. The disagreements among them on various issues might have existed even then, but they rarely surfaced or came out in the open. The key difference today is the effectiveness of the orchestra conductor. In the 1990s, Manmohan Singh as finance minister managed to resolve all the differences of his key team members and hammer out a cohesive policy framework. Today, Manmohan Singh as Prime Minister seems to be failing to function as an orchestra conductor with the same effectiveness.