Modi signals big change in policy, now to deliver on it

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February 11, 2021 5:44 PM

Rare to see a PM praising private sector in the way Modi did; vital to ensure this is translated into policy change

In this context, Modi’s full-throated defence of the private sector and its role in taking India to where it is today was especially welcome.In this context, Modi’s full-throated defence of the private sector and its role in taking India to where it is today was especially welcome. (File image)

Even decades after the 1991 reforms, the business class has mostly been viewed with suspicion, perhaps why Congress MP Rahul Gandhi’s famous suit-boot-ki-sarkaar jibe managed to tie up the government in knots for so many years. Indeed, even today, those whipping up emotions against the three farm laws are talking of how all the changes are driven by prime minister Narendra Modi’s desire to enrich Ambani and Adani; in the case of Reliance Industries’ Ambani, RJio’s telecom towers were vandalized in Punjab and its Market/Digital/Jewels/Fresh stores were shuttered after protesters threatened to damage them. In the case of the Adani Group, the fact that it owned silos that were hired by FCI was cited as ‘proof’ of its interest in the farm laws; but surely Adani’s business with FCI would put the group in the camp of those in favour of the MSP-based procurement continuing as this would increase the amount of grain/rice that FCI needed to stock!

In this context, Modi’s full-throated defence of the private sector and its role in taking India to where it is today was especially welcome. Just because an individual has become an IAS officer, he said, doesn’t mean he can fly planes or run fertilizer factories … why do you want to give the country to babus, he said, using the derogatory term for bureaucrats. Whether it is the mobile phone revolution or the current need for vaccines, he asked, was it the public sector and the babus that fulfilled the public need or was it the private sector? Indeed, the few obvious examples apart, far from running the country, the babu has mostly brought the country to ruin by coming up with complex red tape that has crippled most enterprise. And, in most cases, when the political class has tried to free the private sector, bureaucrats have ensured there are enough caveats in place to thwart the move. By way of example, while the political class has tried to free the price of both crude oil and natural gas on various occasions in order to incentivize production, the rules that were put in place allow this only for new discoveries – if a firm doesn’t make money in existing fields, how will it fund new investments? – or for discoveries which are at certain depths in the sea or where the water has a certain temperatures! More recently, while the government wanted to free up educational institutions like the IIMs, the education bureaucracy came up with rules that would allow them to dismiss the board of the IIMs; the plan has just been nixed by the law ministry. High-pitched tax demands have persisted despite, over the years, the government promising to rein in tax terror … the list goes on.

So, there is an obvious case for reining in the bureaucracy. But there is a flip side that can’t be ignored either, and that is the role of the political class. Surely the hounding of Monsanto, including the then additional solicitor general telling the court that the patent granted by India’s Patent Office was illegal, was not something that babus did without the political class’s direction? And the decision to appeal almost all global arbitration awards, not just Vodafone and Cairn, cannot be something the babus came up with on their own against the wishes of the political class. And, with no workable solution found to the issue of the 3Cs knocking on their door post-retirement – ex-coal secretary HC Gupta was sentenced to a 3-year prison sentence for taking what seemed a sensible decision – even proactive bureaucrats find salvation in kicking decision-making to the political class and in putting in more caveats to protect themselves. Even as it celebrates its private sector, India needs to completely rethink its governance model/priorities since the babus aren’t the sole culprits either.

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