The Opposition to the main ruling party came together in 1977, inspired by Jayaprakash Narayan (JP), and it joined hands in 1989 under V.P. Singh’s leadership. As the Opposition gears up for the 2019 elections, there is no JP, not even a V.P. Singh [to lead the campaign against Prime Minister Narendra Modi]. What shape do you think the Opposition will take over the next one year, what are its prospects? And what role can the Congress play in this — the largest opposition party, but with a leader, Rahul Gandhi, who is not widely accepted.
There are three possible scenarios: the first is that the entire opposition comes together in a mahagatbandhan [grand alliance], including all the regional parties in opposition to the BJP, and the Congress, and they put up one candidate against the BJP [in each constituency].
The second is that the regional parties come together, which is easier because they don’t have any conflict of interest in each other’s States, and they make an adjustment with the Congress, wherever it is possible. [In this scenario] Lalu’s party [Rashtriya Janata Dal] has an alliance with the Congress in Bihar. Stalin’s DMK [Dravida Munnetra Kazhagam] with the Congress in Tamil Nadu, Sharad Pawar’s NCP [Nationalist Congress Party] with the Congress in Maharashtra. Regional parties accommodate the Congress in their area of dominance.
The third possibility is that just the regional parties come together — the Congress fights on its own and the regional parties on their own.
There is also a likelihood that there is no such alliance, [only] State-level alliances. They do well and come together in a post-poll alliance, the 1996 model.
The opposition parties, including the Congress have not been able to get their act together.
Unfortunately, despite some to-ing and fro-ing, the opposition parties, including the Congress have not been able to get their act together except for the by-elections held in Uttar Pradesh and Bihar. But my experience would suggest that [such] things start happening at the last moment.
If there is a downslide in the BJP numbers, it will not stop at 220, they will go below 150.
I will give you another analysis. There are four States — Uttar Pradesh (U.P.), Bihar, Jharkhand and Maharashtra — which together have 182 Lok Sabha seats, [of which] BJP [and its allies] probably has 159. In U.P. there is already an alliance and I don’t think they will call Assembly elections in U.P. for a year and a half. In Bihar, they already have an alliance, Lalu and the Congress. In Jharkhand and Maharashtra, there is already an alliance. In some States, the BJP had 100 per cent of the seats, Himachal Pradesh, Delhi, Rajasthan, Gujarat. They won nearly 100 per cent in Haryana and Madhya Pradesh. They did well in Karnataka against a divided opposition. Now in all BJP-ruled States, it will be double anti-incumbency, plus opposition unity. So will they be able to repeat their performance? If there is a downslide in the BJP numbers, it will not stop at 220, they will go below 150, because the same logic will apply everywhere.
The point is that in most States there is already a regional alliance of opposition parties, so whether there is a mahagatbandhan at the all-India level, it does not matter. Mamata is ruling the roost in West Bengal, the DMK is the likely winner in Tamil Nadu, in Kerala it doesn’t matter which side wins because the BJP is not there. In Karnataka, the JD-S-Congress alliance is there.
So either the regional parties are in full control, or they are in control through alliances. Now it depends on the skill of the Congress to what extent they make their adjustments. If they don’t, then their prospects don’t look very bright. If they tag along, then maybe they will come out with flying colours. Delhi and Punjab will see triangular contests, with the AAP [Aam Aadmi Party] the third party, as the AAP and Congress are unlikely to come together. Two, if there is a pre-poll alliance, I am a strong votary of the thesis that there must be an alternative worthwhile programme, not merely an electoral adjustment.
The opposition will have to fight the BJP’s trap of making the elections presidential.
Three, [the opposition will have] to fight the BJP’s trap of making the elections presidential. We are not a presidential system, but a parliamentary system [in which] it is the responsibility of the elected representatives to choose their leaders. In India’s political history, if it has suited the opposition not to declare a leader and go into an election, they have done that, including the BJP, and including the BJP recently. Who was the BJP’s Chief Minister face in Haryana, Jharkhand, Maharashtra or, most recently, in U.P.? Nobody. Modi was not going to be Chief Minister. …
… there the strategy was to show Modi as the leader, even though that was a State election.
It may have succeeded, but it was illogical to say that we are fighting the U.P. election on Modi’s face. But when the national elections takes place, the BJP will be well within its rights to say ‘we have Modi, who do you have’? This will also have to be dealt with because there is logic on the other side also.
According to you, the BJP could lose — as many people are saying — more than a 100 seats, some say 150. Do you think any challenge from within the BJP to Mr. Modi’s leadership from say Rajnath Singh, Nitin Gadkari is possible?
I don't think Modi will be challenged whatever the number of seats.
No, I don't think Modi will be challenged whatever the number of seats, even if it is 120. He will still get elected as the leader if he wants it. The rest of them will not challenge him, because they just don’t have the courage.
Is it because of the backing by the Rashtriya Swayamsewak Sangh (RSS)?
Modi has shown it is possible to win India on the basis of Hindutva and have a majority.
Modi has shown it is possible to win India on the basis of Hindutva and have a majority. That’s why he is such a darling of the RSS which will bend over backward to accommodate him and that is why replacing him is not possible.
As they have decided that Hindutva has the power to win an election, they will try to talk about the temple issue.
They will use all the arguments to make it a communal election. Wherever they can have communal tension, they will do that. Kashmir will be an issue: I was just looking at a video [in which] there was some lady in a saffron T-Shirt spewing falsehoods and poison against Article 370 — a lot of people will see it and they will become convinced that is what is happening. Similar poison is being spread on the social media. Spreading communal hatred is an offence under IPC [Indian Penal Code] but is anybody bothered?
Then, they will use Pakistan. Gujarat was a medley of all this: they went to ridiculous lengths to bring in Pakistan, [talking about] Manmohan Singh going to Mani Shankar Aiyar’s place for dinner with a retired Foreign Minister of Pakistan, Khurshid Kasuri. Then those posters appeared saying that Pakistan wants [the Congress’s] Ahmed Patel to be Chief Minister.
You recently said that there is an undeclared Emergency, but the BJP says there have been no mass arrests, no official censorship. Could you please elaborate?
A declared emergency is not possible, but what Modi has done is very clever: control the people who run the institutions, and you have the institutions under your control.
Let’s start with the cabinet. A Prime Minister is the first among equals, the cabinet is collectively responsible to Parliament and the Lok Sabha. Now you have a Prime Minister who is way above all the Cabinet Ministers. He takes decisions on his own; he took the decision on demonetisation. He decided, along with Amit Shah to withdraw support to Mehbooba Mufti [in Jammu and Kashmir]. The Home Minister did not know. He has reduced Foreign Minister Sushma Swaraj, and there was this vicious attack through trolls. It was only after the media pointed out that nobody is coming out in her support, that a few people came out in her support. But has the Prime Minister spoken on this? His senior most Minister is attacked [online] and he keeps quiet. He has destroyed the cabinet, and the cabinet system.
He has treated the cabinet with complete disdain: this is the Gujarat model.
Nobody has pointed out, for instance, that from 2014 onwards, you have a Minister of State who is in independent charge of one ministry, and subordinate charge of another ministry, what is his status? Manoj Sinha is independent charge of Telecom and subordinate charge of Railways. It is the same thing with V.K. Singh. He has treated the cabinet with complete disdain: this is the Gujarat model. I matter, nobody else matters, and I will rule through the bureaucracy -
Then Parliament — he bowed down to Parliament in 2014, but he has treated Parliament with complete disdain: look at the number of working days scheduled for Parliament this year, or the years before...[they have come down sharply].
Take the Supreme Court, where the four senior most judges for the first time in our history publicly made the accusation that benches are arranged to get favourable judgements, and this country is still in a slumber, we have not taken any notice.
The Election Commission (EC), too, is compromised: why did they have a gap of four to five weeks between the Assembly elections in Himachal Pradesh and Gujarat (in end 2017) when counting was on the same day? Why not hold the assembly elections simultaneously? Then you had the famous case of the 20 AAP MLAS who were disqualified, the President was misled, he also agreed with that and then it was overturned by the Delhi High Court. The Reserve Bank of India, that hoary institution, is directed to call a meeting of the RBI board, and told to pass a resolution recommending demonetisation.
The bureaucracy is nowhere in evidence except those favoured by the Prime Minister. The system has collapsed. Look at how investigating agencies are being misused, going after [former Finance Minister] Chidambaram, but why is somebody not going after Amit Shah and his son? When the news came that in the Ahmedabad Cooperative Bank Rs.745 crores was deposited within five days, was there an enquiry? No.
Every institution in our country has been severely compromised. Narendra Modi is very sharp. He learned from [Indira Gandhi’s] Emergency and improved upon it by having this undeclared emergency where one, all the institutions are compromised; two, there is tremendous fear; three, the media, except for some honourable exceptions, are singing praises of the government.
Go back to the famous Advani saying about Emergency: When they were asked to bend, they crawled. This time they have not even been told and they [the media] have begun to crawl. Therefore, the opposition has a very difficult task.
Social media is being controlled, the print and television media are being controlled.
[Even though] there are some instances on social media which are anti-Modi, social media is being controlled, the print and television media are being controlled. How do you reach the truth to the people? Only through word of mouth, as you did during the last Emergency, the people have to spread out and reach the word of truth to the masses.
Did you expect things will pan out like this in 2014?
I had a strong suspicion that they could and that’s why I opted out. I was not infirm or sick and I could have contested the election of 2014 and won, but I had a suspicion that I will not able to get along with Modi, not even as an ordinary member of the parliament.
Initially you supported him.
I said that he is our best bet, I lent support and that was the practical approach at that time.
Yes, I did, I said that he is our best bet, I lent support and [said] if the BJP wanted to make it a presidential election, Modi vs Somebody, then we have a very good chance of winning. And that was the practical approach at that time.
Did other senior BJP leaders expect things to turn out this way?
I am sure they did. The surrender of the BJP leadership did not start after Modi became Prime Minister, it started immediately after the BJP declared Modi as Prime Ministerial candidate in Goa. I remember attending a public meeting in Ranchi, where both Rajnath Singh and Modi were present. I was aghast when I found that Rajnath Singh was to speak before Modi, even though he was the party president. I asked Rajnath Singh, why didn't you speak after him? Chalne dijiye, chalne dijiye [Let it be], he said. Why did Sushma Swaraj surrender so meekly not only before the trolls, but even before that?
Is it because Mr Modi had more support within the party, among the rank and file?
That support was built. It could not have been the people in Uttar Pradesh were hankering after Mr. Modi when he was Chief Minister of Gujarat.
We are talking about the period in the run-up to the elections.
Once he was declared the Prime Ministerial candidate, there was no stopping him, and that was an election which would have been won by the BJP, whoever had been the Prime Ministerial face. If Sushma Swaraj had been the Prime Ministerial face, maybe we would have had 10-20 seats more.
The Concerned Citizens’ Group (CCG), of which you are a member, has stated in its latest fifth report compiled after your recent visit to Jammu and Kashmir, that the sense of “alienation” and “disempowerment” among Kashmiri youth is at an all-time high and even parental control cannot stop them from becoming militants. What is the difference between the youth who joined the separatist movement in the first wave in the 1990s and those of the current generation, and what has brought about this?
Alienation, which started in the early 1990s, has become all-pervasive now.
The only difference is that alienation, which started in the early 1990s, has become all-pervasive now. In the early 1990s, it might have been somewhat limited, but today it is all-pervasive.
Also, there is no sense of fear of getting killed among the youth.
No, they have no fear. On one of our trips, we went to Shopian to meet civil society groups. There was a young bearded person who said, “I have come to meet you because I wanted to tell you that we are very grateful to the Government of India for removing the fear of death from the minds of the Kashmiri youth. So what can you do to us? You can kill us, so kill us.”
Death now does not matter in Kashmir. Recently, a young man told his parents that he had picked up the gun and had become a militant. They gave him their blessings, and he was killed eight hours after that in an encounter in Pulwama or somewhere. He lasted as a militant for only eight hours. These people have no training, we were also told that they are saying the number is declining.
Sitting here in Delhi, we cannot realise the alienation which has taken place, the way in which India is hated in Kashmir.
The limiting factor is the supply of arms. Suppose they have one AK-47, it comes to the village, then there is a village assembly, and there is a lottery, who will get this, and the chap who is lucky to get his name in that lottery, is given that AK47. He is lionised, taken in a procession around the village and he becomes a militant with the support of the entire village. So, every youth now would become a militant in Kashmir, if he had the arms. Sitting here in Delhi, we just cannot realise the alienation which has taken place, the way in which India is hated in Kashmir. And they may not be in love with Pakistan, but Pakistan is certainly better placed in their minds than we are.
The problem in Kashmir was always one of alienation from India, but it was not a Hindu-Muslim issue — that is what was generally believed. Was that a correct reading? Has the situation changed now?
It has become one and we again have ourselves to blame because whenever you go there, and even talk to reasonable people, they say this is not the India we have acceded to. You kill one Akhlaq here, a Zubair there, some lynching here, some lynching there. It all gets magnified, many times over.
You are saying Kashmiris are affected by incidents in mainland India.
They say we had opted for secular India, that secular India does not exist.
Yes. You abuse a Kashmiri youth somewhere in the country or beat him up, or throw him out where ever he is, all these incidents are magnified, beyond proportion, and they feel that Kashmiris are not safe in India, the Muslims are not safe in India. They say we had opted for secular India, that secular India does not exist. And TV channels are contributing enormously to that by demonising Kashmiris.
When Narendra Modi became Prime Minister, he invited leaders of all the SAARC nations to his swearing-in. Was that intended as a hand of friendship or was there some other message? I ask this because relations with all our neighbours is at an all-time low.
No, it was was just optics. When he invited SAARC leaders, he also secured the presence of Nawaz Sharif. It was not the hand of friendship to Bangladesh, Nepal or Maldives: the most important hand of friendship was to Pakistan. Then he followed it up with his visit to Lahore in December 2015. Then there was the Foreign Minister’s visit, the Foreign Secretary’s visit. All this was optics for the international community. This was the preparation for the hard line. All of it was carefully and deliberately planned to convince the international community that ‘I extended the hand of friendship, Pakistan spurned it’. So if he says bad things about Pakistan, who can blame him? Or if there is shelling on the line of control, then so be it.
We have never had such poor relations with Nepal, Maldives, Sri Lanka…
Foreign policy is in tatters.
Why only talk of this? Foreign policy is in tatters. This is something which must be emphasised, when you look at the four years of Modi: he started out by claiming he had done the aswamedha yagya in India: his horse had gone around and won everywhere, now he was releasing the horse to conquer the world, so aswamedha yagya at the international level. Foreign policy was projected because he has a deep sense of insecurity.
You are right, the relationship we have with every country today is much worse than it was four years ago, including with the U.S., Russia, and our immediate neighbours. This hugoplacy has not helped. Neither hugging nor first naming help in foreign policy. Foreign policy is serious business, every country is there in the field to protect its national interests first.
You are talking of a lack of preparation …
I am against summitry, especially when it involves difficult relationships. A summit should be the last thing, a rare thing. What Modi has done is that everything has been raised to the summit level, so where are the other levels? Where is the Foreign Minister, the Foreign Ministry? He is holding informal summits as though formal summits were not enough.
But most Prime Ministers from [the first Prime Minister, Jawaharlal] Nehru onwards have taken a special interest in foreign policy…
You are right. Prime Ministers, including Vajpayee, have taken a special interest in foreign policy, and the PMO [Prime Minister’s Office] has taken a special interest especially after the creation of the post of NSA [National Security Adviser], but the NSA and the Prime Minister did not replace the Foreign Minister.
I have some experience of that. I could not have imagined when I was Foreign Minister for two years that Vajpayee will go abroad and not ask me to go with him. I accompanied him even as Finance Minister. For instance, there was a CHOGM [Commonwealth Heads of Government Meet] taking place and he asked me to come because he wanted me to address the finance summit, so India had a strong presence at the finance summit.
When I moved to the External Affairs ministry, invariably, Vajpayee would ask me to come on every important mission, to give him whatever advice I could. Modi has stopped that completely. He does not take Sushma Swaraj on any of his visits. He is conducting foreign policy. She has no part in it.
For the first India-ASEAN summit, I was travelling in the Prime Minister’s plane and he called me and said, “Have you seen the speech they have prepared for me?” As you know, the PMO zealously guard whatever they prepare for the Prime Minister. They receive inputs from everyone but the final speech will not be shared even with the Foreign Ministry or the Foreign Minister. So I told him, I have not seen the speech, so he asked, perhaps Brajesh Mishra, “Inko bhi speech dikhaiye (Show the speech to him also)”.
I went through the speech. Then I said, what is the news in this? They looked surprised. I said Japan, South Korea and China are summit partners of ASEAN — they all have a free trade arrangement with ASEAN. We are the fourth partner, so why shouldn't our Prime Minister also say that we are interested in a Free Trade arrangement with ASEAN. So Deepak Chatterjee, the Commerce Secretary, was asked to include [it] in Vajpayee’s speech. That became the highlight - that India has offered a free trade agreement with ASEAN.
I remember an East Asia delegation level talks in which the President or Prime Minister made a point that India had given a loan of $ 5 million or $10 million and said, ‘Mr. Prime Minister, it is becoming somewhat difficult for us to service the debt so we would be grateful if you could offer some concession’. I was sitting next to him, so I whispered in his ears, “inko boliye, hamne poor loan hi maaf kar diya. [Tell them, we have waived the entire loan.] So Vajpayee waived the loan. They couldn't believe it, they had just asked for a concession. That had a tremendous impact on the other side.
What role does the National Security Adviser, Ajit Doval, play?
Brajesh Mishra was the most powerful NSA, much more powerful than M.K. Narayanan, or anyone else in the UPA. He derived more power because he was also the Principal Secretary, and also because he was more experienced, having served in China, in the United Nations etc. He played his role but never minimised the role of the Foreign Minister. Now only Doval goes [with the Prime Minister]. There is no foreign minister, so Doval has the run of the place.
In the run up to the 2014 election, was a plan prepared in the BJP for the economy, should the party form a government? Because the economy was in acute need of attention.
Nothing. No plan other than what was put in the manifesto; apart from that, no blueprint. We all used to speak on behalf of the party on whatever we thought was important.
Immediately after election results were announced, you had addressed a press conference and one got the impression that there were a lot of ideas in the party for the economy.
The government went on its own trajectory. Modi felt there was no need for any one of us. He must have had something in his mind, which he never shared with us. After the government was formed, the only interaction for which I was invited was when they were abolishing the Planning Commission and replacing it with the NITI Aayog. I got a call from the PMO, saying that he was going to take a meeting. I was asked to submit my recommendations in writing, which I did. None of the recommendations were [taken on board].
Modi had started off with ‘Make In India’ and suddenly became very pro-poor, 2015 onwards…
He was deeply impacted by the 'Suit Boot Ki Sarkar' [slogan] and he wanted to change that image. So, he started mouthing things which were pro-poor. He again tried to connect with the masses and then came out with a number of schemes which he could then talk about. Demonetisation is one, Jan-Dhan Yojana, Mudra Yojana — all these are the renamed schemes coming from before. He went to Mumbai recently and interacted with the corporates, so the corporate link has not weakened. That is in place. Simultaneously, he is also trying to woo the masses by appealing to the poor.
But corporates are complaining, at least privately, about tax terrorism.
But tax terrorism is against whom? It is being very selectively used to discipline those who are not within the ambit. Those who are already with him are not suffering at all.
In terms of policy, what have corporates received from the government?
The corporates will be happy if through your policies you don’t do anything to harm them.
The corporates will be happy if through your policies you don’t do anything to harm them. He has done nothing to harm them. I am, on the economic front, very concerned about another issue — fudging figures. GDP figures, inflation figures, employment figures are [all] fudged. Our NPA [non-performing assets of banks] figures are fudged. This is something which has never happened before.
I used to shake as finance minister when the industrial growth of a quarter came as 1.4 for 1.6 or something. I used to say ‘there must be something wrong, how can it be happening’. But I never told the Department of Statistics to do this [fudge figures]. Look at what they are doing to the employment figures. The very fact that they are taking the EPFO [Employees’ Provident Fund Organisation] figures is completely contrary to all logic. These are not employment figures, these are figures of formalisation of employment which already exists.
The Labour Bureau in the Labour Ministry carries out quarterly surveys, household surveys, to find out about employment generation. Now the Labour Bureau has been told, ‘don’t do those’. So, I will not be surprised if by the time the elections are actually held, you will find that India is growing at 10 per cent, we have achieved near full employment and that there is no inflation. Suddenly you will find that India stuck to the fiscal deficit [target] and the current account deficit and everything is absolutely hunky-dory.
How can it be done? By changing the method of calculation?
Yes, changing the method of calculation. Earlier also, as you are aware, [for] the GDP figures, they changed the base year and they changed the formulas. These twin things gave them an advantage. Apart from that, what they are doing is [this]: the quarterly GDP figures are the figures of the corporates, not even [of] the entire organised sector, and certainly not of the unorganised sector.
The unorganised sector figures come into our system with a lag of three years. Now, what happens is that if the economy is firing on all cylinders, then you get the corporate figures and you imagine that the unorganised sector will also be going at the same pace. In the normal course, this assumption will be valid. How our Department of Statistics has been calculating growth, I am not quarrelling with that. But today it does not take into account demonetisation’s impact. It does not take into account GST impact, which has done tremendous harm, especially to the unorganised sector and the MSME sector.
Those sympathetic to the government say that this shrinking of the unorganised sector is a great thing. They are calling it ‘creative destruction’.
I was perhaps the only voice in the BJP, when we were in the opposition, which was supporting the GST.
This is not right. I was perhaps the only voice in the BJP, when we were in the opposition, which was supporting the GST. Was Modi [as Gujarat Chief Minister at the time] bothered about GST? His finance minister came before the Standing Committee on Finance [that was studying the bill proposed by the UPA government for amending the Constitution to introduce GST] which I was chairing and opposed GST. The Madhya Pradesh government opposed GST. Arun Jaitley, Sushma Swaraj, L.K. Advani, Rajnath Singh were completely unconcerned. The GST constitutional amendment came before my Standing Committee and I recommended that it should be passed, but who in the BJP was bothered about GST?
Are high GST collections proof of the success of an indirect tax?
What was the total collection of the State and Government of India taxes together before GST was introduced? They say we have crossed Rs. one lakh crores. First, they must tell us what the collection of the State Government was and what was the collection of the Union Government. For all taxes we must have comparative figures. There is an inevitable tax growth because the economy is growing, which will create tax collection growth.
Does the rate structure seem revenue-neutral or are they higher?
Of course, they are. I reduced central excise rates to three: mean rate, de-merit rate and merit rate. Here was this model. So, why go for five rates? And, why so for 28 per cent? When I was finance minister, 8 per cent was the merit rate, 16 per cent the mean rate and 24 per cent was the demerit rate. There was no 28 per cent.
There was a philosophy behind this. It was not somebody’s whim. Over 90 percent of the total central excise that we collected came from the mean rate. The so-called demerit rate [goods], the air-conditioners and all the luxury items, were at 24 per cent.
What do you make of the narrative of there being two finance ministers?
You have a Finance Minister, somebody in charge, and you have a Minister without Portfolio. But the Minister without Portfolio is a super finance minister and the minister in charge of finance is behaving like the junior. [This] suits the Prime Minister the most because he is controlling the Finance Ministry — even when Arun Jaitley was there he was.
But isn’t it ill-advised to do this, given the challenge to the economy from various factors?
This is the first time in four years [that] we really are facing some challenges.
This is the first time in four years [that] we really are facing some challenges; otherwise it was all hunky-dory on the economic front. I was only Finance Minister, I didn’t have any other Ministry, and I was overwhelmed with work.
The Finance Ministry, from Jaswant Singh’s time, was [merged with] the Ministry of Corporate Affairs. He also had the Ministry of Disinvestment. It is now a Department of Disinvestment. The Finance Minister [Arun Jaitley] sees these two other Ministries, then he has the Ministry of Defence. When he sheds the Ministry of Defence, he had the Ministry of Information and Broadcasting. Then he shed I&B [ information and broadcasting]. Now you have Piyush Goyal, who is Minister for Coal, Railways, Finance, Corporate Affairs, and the BJP party treasurer—and many more things. So, you have treated the Ministry of Finance as you have treated your cabinet and Parliament.
How will Modi know what is the amount of work in that ministry? If you really want to be a hands-on Finance Minister, then you can’t do justice to corporate affairs, disinvestment, defence, information broadcasting, coal and railways.
This is the most absurd arrangement that anyone can think of. They are facing challenges for the first time because crude prices have gone up. Just one thing that has happened apart from the deteriorating [trade] situation globally.
It is not looking very optimistic.
No, it is not.
And, politically, as elections are due?
Ultimately, it will depend on who the Prime Minister is and what kind of team he has. I have never bought this idea that a coalition government does not do well.
In fact, coalition governments have performed better …
Yes, there is empirical evidence to suggest that.
This government has presided over a banking paralysis. Nothing it has done seems to have helped.
The ultimate solution is improvement in the general health of the economy.
It will not. The ultimate solution is improvement in the general health of the economy. That is the ultimate solution to the bank NPAs. Everything else is patchwork. If the economy is growing on a healthy basis, then bank NPAs will be taken care of.
I remember I used to make two points: I used to say that the government should hit the ground running, get going all the stalled projects. Policy paralysis was where? In the stalled projects. [Rs.] 25-30 lakh crores worth of projects were held up. The other was to attack bank NPAs. The two were linked. They had bank NPAs because the projects didn’t take off. Make as many projects as possible take off, and bank NSAs will be taken care of.
The prescription that I used to suggest was that apart from new projects, get the old projects moving. Now, except [Roads Minister Nitin] Gadkari’s department — some progress took place in roads — nowhere else is that evident.
[Under Prime Minister Atal Bihari] Vajpayee, we had a National Road Programme, Rural Roads Programme [and] we had housing coming up as a major sector. All this contributed to the generation of demand in the economy. That is why the economy had started to pick up despite all the challenges that he faced. After that, 10 years of UPA, and four years of Modi, where are such projects? They are building more roads perhaps, but where are the newer projects?
My thesis was that you get investment goods demand moving, it will automatically create demand for consumer goods.
Has somebody sat down and thought how you can increase demand in the economy? Has somebody sat down and thought what the sequencing of that demand should be? We considered it and I put first priority on generating demand for investment goods. My thesis was that you get investment goods demand moving, [and] it will automatically create demand for consumer goods, because people will have money in their pockets. This sequence was reversed during the UPA regime, when the global crisis hit the world and India in 2008. We got on the wrong track by promoting consumer demand.
Everything that the UPA did was focussed on raising consumer demand. This reversed the sequence and then the RBI started raising the interest rates — 13 times. Capital become scarce, so investment was impacted.
The concession should not have been reduction of excise duty on consumer goods. The concession should have been, and the loss of revenue should have been incurred, on encouraging investment. That is the cardinal mistake.
Q: Finally, how many seats do you give to the BJP in the next general election?
A: 118.
( Smita Gupta , Senior Fellow, The Hindu Centre for Politics and Public Policy, was until recently Associate Editor, The Hindu , New Delhi. In a journalistic career spanning 38 years, she has covered all major political parties, the Prime Minister's Office, the Indian Parliament, and national and State elections, especially in Uttar Pradesh, Bihar, West Bengal and Gujarat.
In 1992-93, she was a Reuter Fellow at Oxford University, U.K. During her year at Oxford, she wrote a long paper on The Emergence of the Far Right in West Europe. She has contributed chapters in academic books on the Bharatiya Janata Party, the politics of Uttar Pradesh, and Parliament. She holds an M.A. degree from Delhi University.
She can be contacted at [email protected] ).
( Puja Mehra is a Delhi-based journalist. She won the Ramnath Goenka Excellence in Journalism Award in 2008 and 2009 for her stories on the impact of the Lehman Brothers' collapse-triggered financial meltdown and the subsequent global economic downturn on the Indian economy. She was formerly a Senior Deputy Editor at The Hindu .
She can be contacted at [email protected] ).