Saturday, September 4, 2010

India's disappointing government

The economy is powering on, but the Congress-led coalition is squandering an opportunity to improve India

THE weightlifting auditorium has a leaky roof. The athletes’ village has no kitchen. Stagnant monsoon water, abuzz with dengue-carrying mosquitoes, collects at most of the stadiums being hurriedly built for the Delhi Commonwealth games, which are due to begin on October 3rd. The security arrangements, in terrorism-stricken India, are shot to pieces because of 24-hour processions of workmen at most venues. Manmohan Singh, the prime minister, reiterates the official line that these will be the “best games ever”. That may depend on how you define “best”.

This shambles, for which corruption, feuding ministries, sapping bureaucracy and shoddy workmanship are all to blame, does not matter to many Indians. Athletics is not cricket. And few know much about their country’s image abroad. Yet it is depressing, not least because it mirrors how large parts of India are run.
When Mr Singh’s government, a coalition dominated by the Congress party, came to power in May last year it was considered to be in a strong position to improve matters. Congress had won a general election convincingly, letting it shake off a few of the troublesome partners, including Communist parties, who dogged its outgoing coalition administration. Its main opposition, the Hindu nationalist Bharatiya Janata Party, was deflated by electoral defeat. And Congress’s leaders, Mr Singh and Sonia Gandhi, the party chief, are highly regarded.

The government has at least managed the economy steadily. On August 31st it said that output had grown by 8.8% in the second quarter compared with the same quarter last year. This figure was made especially rosy by the relative gloom of a year earlier. Yet it puts India back in its wished-for realm of 9% growth, and it is based on strong growth in job-creating manufacturing, which increased by 12.4%.

But almost everywhere else the results are disappointing. The government has brought almost none of the economic reform India needs. And it has done no more in other pressing areas, like infrastructure and health care, than its predecessor. It may even have jeopardised one of that government’s biggest achievements, a civil nuclear co-operation deal with America that was expected to lead to big investments in nuclear energy. On August 30th India’s upper house passed a nuclear-liability law that will make suppliers of nuclear fuels and related gear liable for 80 years in the event of any malfunction. That may well deter them.

Worse, the government’s poor management of several crises makes it seem incompetent. These include violent separatist protests in Kashmir, where an 11-year-old boy was killed by police on August 30th, becoming the 65th victim of the year, and a worsening Maoist insurgency in east India, which has cost almost 900 lives this year.

The easy response to this disappointment is to blame unrealistic expectations.

Despite hopes bandied about by businessmen, there never was much prospect of this leftist government bringing economic reform to India’s statist financial sector or protected retail industry.
But even when the government has tried bits of reform it has often got stuck. The biggest, an effort to prune the country’s dreadful thicket of indirect taxes into a tidier form, an all-India Goods and Services Tax, has been pushed back by a year, to April 2012. Another, to scrap a petrol subsidy, announced in June to many loud public protests, has been followed by only one rise in petrol prices, which suggests they are not yet free.

The government’s inability to make itself work better is a more basic failing—richly evident in the games’ foul-up—for which Congress, in charge of the Delhi state government, is especially guilty. To address a big weakness of the previous government, road-building, an able minister, Kamal Nath, was appointed. He promised to build an average of 20km a day, but this looks unlikely.

In education, another priority, early progress has slowed. The education minister, Kapil Sibal, has promised an array of improvements, including universal primary education, partly provided for through private schooling. This has been enshrined in law, yet its implementation is bogged down. State governments are against any change that the centre will not fund; and its negotiating skills are poor.

The man at the wheel

A lack of strong leadership underlies that. Mr Singh’s power is limited. From her central Delhi bungalow, at 10 Janpath, Mrs Gandhi controls the government. Ministers also pay more heed to the man expected to be the next prime minister, her 40-year-old son Rahul, than to the current one. Yet on the rare occasions when Mr Singh has decided to put his shoulder to the wheel, it has moved. That explains why the America-India nuclear deal was passed by the previous government, despite much hostility to it.

Why Mr Singh, a formidable economist and liberal, has not tried to do more—especially to calm the crises in Kashmir and the east—is baffling. But his reluctance to act more vigorously explains why he is rated less highly at home than abroad. According to Newsweek he is the world leader “other leaders love”. India Today, by contrast, found that 1% of Indians consider him their first choice for prime minister.

Mr Gandhi, a late-developer, meanwhile shows little interest in the tough business of policy. He is devoted to rebuilding Congress, especially in populous north India; forthcoming state elections, in Bihar in October and West Bengal next year, will be important tests of his progress. This ambition also explains Mr Gandhi’s single recent policy statement. After the government forbade a big mining company, Vedanta, to extract bauxite from a mountain in Orissa sacred to local tribes, he rushed to present himself to them, on August 26th, as their “soldier in Delhi”. Indeed they need one. And the tribal vote, about 8% of the total, would certainly be helpful to Congress.

But it would be more useful for India if Mr Gandhi could get a long-stalled land-acquisition bill through parliament. It would redefine the terms under which the government can acquire land for industry, an urgent need, in a poor, crowded country. The Economist

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