Dear Prime Minister,
What is at stake today is nothing less than the credibility of your government. Corruption, a steady drift in policy-making, and a paralysis of governance have raised serious questions about this government’s ability to run the country. You give the impression that you are in office but not in power. So, what should you do?
The answer, I think, lies in some hints that you gave in what was otherwise a disappointing press conference last week. The government should play from its strength and reassert its authority. You should take credit for some of the reforms that you have almost achieved. The best example is the far-reaching Goods and Service Tax (GST). It is the most important tax legislation in India’s history as a free nation, which will for the first time make India into one common market, cut huge inefficiencies and corruption, improve revenues of the states and the centre, lower the overall burden of indirect taxation, and eventually lower prices.
Although GST was proposed by the previous NDA regime, your government has worked patiently with the states to make it almost into a reality. You are now ready with a Constitutional amendment which is the next step. However, the states ruled by the Bharatiya Janata Party oppose it. Well, it is not good enough for you take the moral high ground and blame the BJP, as you did at your press conference. You have to sit down with opposition politicians and cut a deal. We know that you are capable of doing that. You cut a deal when it came to the Nuclear Deal and helped to transform our relationship with the United States. This is as important a moment in the nation’s domestic history as the nuclear deal was to our international security. Once the deal is made your government must go on the offensive and make the nation understand the visionary significance of this achievement.
What I am suggesting is that you should try and recover the spirit of 1991 and become a reformer again. No longer do you have to contend with the Left parties. Take the case of food inflation. So far, your government has been applying short term bandages—you have tried to catch hoarders, stop forward trading, forbid export of grains when the country has had a bumper rice harvest and expects a record wheat crop (while ignoring that Rs 17,000 crores of grains are rotting under the tarpaulins of FCI). The key thing is to increase long term supply. This requires that you recapitalize and reform agriculture both in the production and distribution stage. You have to allow competition against FCI in the warehousing of food, permit foreign investment in modern retail to establish cold chains and reduce crop wastage, and allow farmers to lease their lands to entrepreneurs in order to raise productivity. Although reforms happen at the level of the states, a strong, reform minded government at the centre can make a huge difference.
Take a third example. The future of our country will be written in the cities, not in the villages. Our cities are crumbling and your government has realized it. It has created a major reform in the management of our cities with the JNNURM (Jawaharlal Nehru National Urban Renewal Mission). Some cities have responded and utilized the huge amount of funds allocated under the scheme, but most have not. States are reluctant to carry out the JNUURM reforms because it will lead to a shift in power from the MLAs to city municipalities. Your government has to publicly shame those states that have not reformed. You should tap into the enormous feeling of competition that exists today between states and move ahead with this excellent program.
A fourth example is The Right to Education (RTE) act, passed recently. It has many good features but it does not address the horrendous ‘license raj’ which persists in education. One needs a plethora of licences to start a school or a college and each comes with a bribe. RTE recognizes that government schools have failed in India and hence it has mandated private schools to reserve 25 per cent of their seats for the poor. Soon there will be a clamour for these prized seats and I fear that they will be captured by politicians and bureaucrats and sold to the highest bidder. While states are presently implementing the rules for RTE, the centre needs to jump in and ensure the autonomy of schools from state interference and seats are given out in a fair manner. Today 35% of Indian children are in private schools and this is growing. You must also get rid of the ‘license rai’ in education as you did in industry in 1991.
There are other reforms that your government has initiated—you have reform bills relating to land acquisition, mining, and other areas. It is not enough to pass legislation, you have to follow through. Our major, central ports are in disgraceful state. The government has tried to bring private participation via a PPP model but the department of shipping has effectively sabotaged it. It has created rules that discourage private investment. Please learn from Gujarat, which has created investment friendly rules for its minor ports, and these ports today account for one-third of India’s total shipping traffic. The same goes with railways. Private participation in freight traffic has failed because railways have sabotaged it by placing unfair conditions on private investors.
These are some of the ways that the government can restore its credibility, Mr Prime Minister. You must recover the spirit of 1991 and make us believe that you are not only in office but also in power.
Dear Prime Minister,