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Irreversible Reforms Hogwash Omkar Goswami
As far as most industrialists, CEOs and chambers of commerce go, it seems that thirteen years of economic reforms have not wiped out the Pavlovian responses that were perfected over four decades of the licence-permit raj. Keeping all political parties happy, mouthing clichés and being parsimonious with the truth continue to be leitmotifs of most captains of industry. Thus, if a much-heralded international poster-boy of reforms is unceremoniously dumped by the electorate in favour of an unknown challenger, then the loser is quickly forgotten, and winner is immediately saturated with hitherto unknown reformist virtues. How else can one explain the reactions of people who consistently championed Chandrababu Naidu as one of the best reformers in India, now saying that they wholeheartedly welcome Congress rule in Andhra Pradesh for it will bring about a resurgence in manufacturing and SMEs? How else can one explain quotes of prominent industrialists proclaiming that reforms are irreversible and will continue at the same pace as before, irrespective of what coalition comes to power? Who are we kidding? This “reforms are inevitable” sound-byte that we will hear ad nauseum for the next few weeks is complete hogwash, and it is important to say this in no uncertain terms. At best, this sentiment can be interpreted as one of fond hope; at worst, it is a part of the old strategy of keeping all political parties happy, for you never know who is going to come to power, and who may you need favours from. Reforms are not only about direction. Increasingly, they are about speed. And I have no doubts in my mind that if certain types of coalitions were to come to power, they would seriously decelerate the pace of reforms. I am writing this piece on 12 May — a day before the votes are counted and the results are known. Therefore, I have to rely on various exit poll predictions. According to these polls, it seems clear that the BJP and its allies are going to fall significantly short of winning over 272 seats. In fact, we are possibly looking at somewhere between 240 and 250 seats. For the BJP to get the support of 25 to 35 MPs will require acquiescing to the absurd demands of small regional or sub-regional rag-tag parties, each of whom will extract a high price. Unfortunately, this will not be a one-off price. Instead, the BJP leadership will have to constantly seek the support of some strange bed fellows each time it considers pushing a significant reform measure. For all his statesmanlike virtues, adroitness and charm, Mr. Vajpayee will be pushed to the limit. In such a milieu reforms will necessarily have to slow down. It will be foolhardy to think otherwise. Matters will be worse if the Congress were to form the government with its allies. It is true that the Congress was the harbinger reforms in 1991; it is also true that Mr. Narasimha Rao didn’t have to deal with hydra-headed coalitions. According to the most optimistic exit poll forecast, the Congress and its pre-poll allies are expected to get 210 and 220 seats. It will require the mother-of-all haath ki safai’s for the Congress to get the support of 55 to 65 MPs. If you go through the list of the potential parties that might support the Congress — with or without Sonia Gandhi as the PM — you will immediately see names that are not associated with either good governance or economic reforms. Optimists argue that even leopards change their spots. I have heard that Mr. Mulayam Singh Yadav’s new-found industrialist friends from Mumbai have changed his views about economic reforms. That may be so; but somehow I don’t see the Mulayams, Mayawatis, Chautalas being reformers of the kind who would delight industrialists, CEOs and other readers of this magazine. Therefore, I don’t see a 210 seat Congress cobbling a coalition government which positions itself as the Ferrari of economic reforms. As far as the “third front” is concerned, it is better for India that such a government remains a pipe dream. So, do you think that reforms will continue at same pace as before? Or will it appreciably slow down for the next year and a half?
Published: Business world, May 2004
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