If the government wants the Opposition to help it in Parliament, it must show some respect, Leader of the Opposition in the Rajya Sabha Arun Jaitley tells Aditi Phadnis
Two recent events came as setbacks for the government’s financial position — the ONGC stake auction and Congress president Sonia Gandhi’s admission that inflation had cost the United Progressive Alliance (UPA) the Uttar Pradesh election…
As far as the economy is concerned, we need to see the bigger picture. Sentiment with regard to the economy is low. Investors are gradually losing their confidence. When sentiment is low, those managing the economy need to do something radical. There is a need to enhance the economic activity. You need investments; investors are looking for a potential market and its prospects.
The question is not only why foreign investors are turning away from India. Even domestic investors are leaving Indian markets and there is a flight of capital. If we don’t take steps, everything will fall through. There will be a drought of investment, with low economic activity which will impact revenue, social sector schemes, infrastructure and job creation. Somehow, we have to get out of this.
What is the biggest problem?
To build consensus, you need two things — the government must be able to define what steps it needs to take as well as build consensus on those issues. It is possible that on some things there will be no consensus at all…
Like foreign direct investment in multi-brand retail?
Yes, we are totally opposed to it. But, on other issues, a consensus is possible.
Economic reform is the art of the possible. You keep doing what is possible and put aside for later what is not possible. Then, you return to it to whittle down areas of differences.
The first problem with the government is that there is no internal consensus on certain issues.
The charge against you is that certain things you started while in power, you are opposing those now…
Without going into specifics, at times we are asked to get ready for consensus. Later, we are told, “So, stand down because there is no consensus within the government itself…”
You mean like the pension reform, which the Trinamool Congress is opposed to?
As I said, I don’t want to go into specifics. Second, to build consensus on economic issues, you cannot delink these altogether from politics. I am personally conscious of the merits of the Goods and Services Tax (GST). But the states’ lack of faith in the Centre — that the Centre won’t be fair to them — is what is making them hold back.
Therefore, building consensus on economic issues without political common ground will always be difficult. Unless the government gives an impression of being fair to its allies, the Opposition and the state governments, it will not be able to implement policies that it wants to.
I do believe all political parties have serious concerns about national and economic issues. But, if this government adopts a posture of political hostility to some political groups, it cannot seek economic consensus.
For example...
You send hostile governors. They hold back legislation passed by the state. You hold up decisions on key infrastructure development such as highways — only on the basis of who is in power in the state.
You misuse the Central Bureau of Investigation (CBI) in the state…
The CBI has not been misused in Tamil Nadu. It has not been misused in Orissa. Both states are ruled by Opposition governments.
What about Gujarat? And, even the National Counter Terrorism Centre (NCTC)…
The home minister says you were on board on NCTC…
Yes, he is right when he says he discussed the National Investigating Agency (NIA) proposal with us. But, is this the way to go about it? That you pick up someone in the state where you have no jurisdiction, bypassing the state government? I have no hesitation in saying the worst decision we ever took was to trust this government by backing the NIA proposal.
You keep talking about Hindu terror. If someone has done something wrong, hang him. But, please show me a shred of evidence against Indresh about whom you people keep writing…
So, what is the fatal flaw?
I believe the UPA model is structurally defective. In a democracy, the Prime Minister must be the natural leader. His authority and writ must run. The Prime Minister cannot be in the mould of a chief executive officer managing a company; his task is more than just implementing board decisions.
In UPA-I, we thought parallel power centres could be a problem. But at least they were on the same page. Now, they are not even on the same page. The government says it is bringing a Bill. But, the Congress members themselves oppose the Bill in the Standing Committee — whether it is insurance or banking, we see only the UPA and the Congress members opposing it.
Another point for introspection is that the government must seriously consider the extent of wastage in various schemes and plug this. This is adding to the fiscal deficit, which is the biggest problem in the Budget.
Another serious problem is the declining tax to the gross domestic product ratio. What would be your solution?
If you raise taxes, you run the risk of making the economy more sluggish. Do you increase the volume of taxes by raising these? Or, by generating new avenues for collecting these?
We’ve seen this during the Hindu rate of growth — raising tax rates is an old method of collecting taxes.
Are you concerned about the state of the capital markets?
More than that, what you need to do is to bring down interest rates. Businesses are suffering and the cost of capital is soaring. The GST and housing sectors are important. Infrastructure needs extra concentration. I had suggested that you let the state governments run their internal railways. Let them call for financial help via public-private-partnerships and make them autonomous in deciding the ways they want to expand railways internally in their own states.
Isn’t commodity management a part of the spiral of high costs — whether it is wheat or sugar or cotton…
The recent example of cotton tells us one arm of the government doesn’t know what the other is doing.
In a situation where the old economy is being torn down, but new transparent systems are not in place, all political forces need to worry about creeping cronyism…
The government is facing a dilemma whether all natural resources should be auctioned. Auction, prima facie, is a fair way of divesting assets. But the moment you dilute the principle of transparency and allow discretion, there is a possibility of misuse. We all have to work at having transparent tendering systems. The process of award has to be transparent because these are areas where cronyism and political corruption breed.
