Thursday, May 27, 2010

One Year of UPA Government's Second Term

The United Progressive Alliance (UPA) Government, led by Prime Minister Dr Manmohan Singh, celebrated first anniversary of its second term on 24 May. Looking back on its first anniversary, UPA second term can draw some satisfaction from the fact that it has survived in a turbulent political environment and has added a few feathers to its cap.

Clearly, a major trump card for it has been the image of Dr Singh. The Opposition indeed has no one who is even remotely a match for Dr Singh's reputation for integrity and efficiency.

This is not to say that expectations have not been belied and everything is hunky dory for the UPA government. During UPA first term, the intelligentsia in particular painted the Left as the ultimate villain that stood in the way of economic reforms. Now, with the Left out of the way, there are nagging questions being asked as to why the stagnation in reforms continues.

The UPA government's achilles heel is, however, food inflation which is running uncomfortably high and is eroding the government's support base.
Review of Performance
It is, in fact, occasioning a frenzied review of its performance. The following is a brief look at its report card of some major areas of common people's concern.

Rate of Inflation: Inflation known as price hike, is one monster which the Manmohan Singh government is unable to tame. And this is despite the fact it is being grappled with by men having proven track records in farming, finance and economics and Congress President Sonia Gandhi whose commitment to the 'Aam Admi' is the pride of the ruling UPA second term.

Be it arhar dal, sugar, potatoes, onions, and to a lesser extent rice and wheat, the prices are spiralling out of control. In 2008, it was estimated that India loses Rs 58,000 crore worth of agricultural food items due to lack of post-harvesting infrastructure such as cold chains, transportation, and storage facilities. If the Government had ensured proper storage facility, food inventory would have been plentiful, leading to prices remaining under control.

Singh is a renowned economist, who has headed the Reserve Bank of India (RBI) and held top level posts at the World Bank and the International Monetary Fund and above all is hailed as the father of India’s globalization and liberalization that pulled the country out of an impending financial collapse in 1991.

For Agriculture and Food Supplies Minister Sharad Pawar, farming and farmers are close to his heart, while his portfolio has thrust on him the onerous task of making farm produce available to the people easily and at affordable prices and at the same time ensuring remunerative returns to cultivators.

Above all, Finance Minister Pranab Mukherjee is known for his politico-economic skills and, while holding the same portfolio decades ago, was credited with choosing Manmohan Singh to head the RBI.

Then what is holding them back from reining in the galloping prices of essential commodities? While the overall inflation is ruling around 10 per cent, the rise in the prices of food articles is much higher, adding to the woes of the poor and much to the embarrassment of the government.
The commitment to maintaining the economic growth rate (GDP) around the double digit figure had taken away the government’s liberty to curtail money supply as high growth means more disposable income in the hands of the people.

State of Economy: With the Indian economy's growth rate at an impressive 8-9 per cent and the economic slowdown hitting the economy much less severely than in most countries, there is something to gloat about. Industrial production and exports are both on the upswing, the latter after a long period of deceleration. With the worldwide slowdown, the job market had been severely hit but there are clear signs that it is picking up.

As we move on however, much more needs to be done to shake off the inertia that has plagued economic reforms for the last several years.

With a normal monsoon forecast, a booming economy growing at 8.5 per cent and foreign capital flowing in despite the economy opening up any further and an unexpected Rs 68,000 crore windfall from the G3 spectrum auction, Finance Minister Pranab Mukherjee sits pretty.

Few finance ministers in the world are that comfortable with their job these days. Most are rattled by the European debt crisis as the economic recovery lands in the danger zone. Pranab is not doing much except talking, giving interviews lauding his own government’s fiscal prudence. There are no demands on him to push economic reforms.

Agriculture: Nothing could be worse than the fact that growth in the agriculture and allied sector Gross Domestic Product (GDP) vis-à-vis total GDP has been continuously declining.

The Food Security-Act is also unlikely to be implemented for another year. The legislation is now lost because of political considerations, differences over poverty numbers and logistical hurdles. But what kept the NCP boss and Agriculture Minister Sharad Pawar and his Ministry in the dock was the government’s inability to control spiralling prices of essential commodities.

Pawar blamed bad monsoon, states’ and international conditions. The late decision to import sugar, Pawar attributes to 'noble intentions' of protecting the interests of farmers besides consumers.
The contention for his statement also comes in the form of continuing farmers’ suicide with most prosperous agrarian state Punjab registering more than 50 farmers’ suicide in 2009.

It can be said without doubt that in the first year of the UPA's second term the agriculture and allied sector GDP has shown a negative growth.

Domestic Affairs: With the setbacks of the November 2008 Mumbai attacks, Home Minister P. Chidambaram, in the past one year, has come under fire from his own party colleagues and the opposition. However, it would be unfair to judge his work in the light of Naxal violence alone.
The Minister also announced the setting up of a national counter terrorism centre and this will be in place by the year end.

Among the path breaking projects is the Rs 2,000 crore crime and criminal tracking network and systems (CCTNS), a national databank of crime and criminals with their biometric profiles. In addition to the enforcing agencies, the courts, jails, immigration and passport authorities will have access to it. The second project is the Natgrid. Eleven designated intelligence agencies will have online inter-connected access to details of phone calls, credit card transactions, visa and immigration records, property records and driving licences of all citizens in the country.

International Relations: Indian foreign policy has been undergoing subtle transmutation since 1991, with the end of the Cold War and the collapse of the Soviet Union. Narasimha Rao began the repositioning of India; the National Democratic Alliance government led by Atal Behari Vajpayee consolidated it. Prime Minister Manmohan Singh’s task was complicated as UPA's first term was dependent on the Communist Party of India-Marxist, for whom United States was anathema. During UPA's first term it was the Indo-US nuclear deal and now Pakistan. And after repeatedly telling Islamabad that it could not be business as usual between the two countries until the Mumbai attackers faced the law, New Delhi agreed to revive bilateral talks at the Thimphu meeting between the two Prime Ministers in April 2010.

The United States today desperately need Pakistan more than India, given the troubles they are facing in Afghanistan, where the security situation is deteriorating at a frightening pace. India, the largest donor to Afghanistan, has almost been reduced to a mere spectator as Hamid Karzai vigorously pursues a Pakistani-propagated proposal to reintegrate the Taliban into the mainstream of the Afghan society, with the blessings of the US and its Western allies.

There has been success with Bangladesh; stalemate in Nepal; and new policy dilemmas over post-Prabhakaran Sri Lanka (as elections loom in Tamil Nadu). With China, trade expanded, rhetoric fluctuated and distrust was concealed. The public perception, however, of the success or failure of Indian diplomacy hinges on the two dominant themes.

The former Soviet Union played the role of a balancing factor in world affairs. It was Russia’s eclipse in the 1990s which made New Delhi turn to the US for strategic support. Perhaps it’s time for the Indian establishment to reinvent the time-tested Indo-Russia friendship and not put all its eggs in the American basket.

Education and Employment: When Human Resource Development (HRD) Minister Kapil Sibal promised to draft nine education reform legislations in the first 100 days of assuming office, he was mocked for being in tearing hurry. In June 2009, Sibal unveiled his 100-day agenda, promising to de-traumatise and de-regulate education. The radical measures Sibal proposed ran the risk of falling by the wayside, given the system’s inherent ability to resist change.

While one of the major achievements is the Foreign Education Providers’ Bill 2010, which saw the Left’s opposition at the time of introduction, the others sailed through with ease. These include the law to accredit higher educational institutes through the National Accreditation Authority Bill 2010; a law to establish national and state educational tribunals to adjudicate disputes related to the sector and a law to prohibit malpractices in education by penalising charging capitation fee, made a cognizable offence for the first time in history. Sibal he has delivered on his promise to de-stress the school system by making Class X boards optional and replacing marks with grades at school.

Also in force is the Right of Children to Free and Compulsory Elementary Education Act, which rolled across India from 1 April. However, the action is awaited on the law on innovation universities and dematting of educational degrees on the lines of share certificates.
Defense: Undoubtedly, it is difficult to say which of Defense Minister AK Antony’s pursuits will secure India’s long-term strategic interests. Will it be his quest of seeing the 'made in India' tag to high value defense equipment or his near fanatic trait of enforcing honesty and probity?

The languid pace of reforms and delay in the induction of key equipment has its fair share of detractors. Antony, has however, set some sort of a pace. The intention is to reduce the import bill for procuring defense equipment. About 70 per cent of the nearly Rs 50,000 crore of the annual procurement budget is spent on imports. Thus, the stress on indigenously equipment, including the nuclear-powered submarine INS Arihant, a stealth warship and the Arjun tank.

Health: More than anything else, Health Minister Gulam Nabi Azad’s first year in office will be remembered for his move to wind up the scam-hit Medical Council of India. Azad dissolved the MCI within a month of the CBI arresting MCI chief Ketan Desai on corruption charges.

How the government goes about regulating medical education will determine how it is perceived in the future.

In June 2009, the Health Ministry received the report of the taskforce to create an overarching regulator for human resources in health. It was called the National Council on Human Resources in Health and was meant to subsume the existing regulators —MCI, Dental and Pharmacy Council of India.

Ironically, Azad and Desai worked closely together when the government allowed private companies to open new medical colleges. They also relaxed norms for creation of more postgraduate doctors. Teaching experience requirements for professors and associate professors were relaxed by one year to 'increase the availability of faculty.'

To encourage doctors for rural stints, Azad announced several incentives including 50 per cent reservation in PG diploma courses for those who serve three years or more in villages. The Minister gave the MCI permission to start a controversial three and a half year Bachelor in Rural Medicine Course. Despite stiff opposition from the Indian Medical Association, which said the course would legalise quackery, Ketan Desai and Azad sealed the deal.

National Rural Health Mission has managed to achieve some heartening goals — Maternal Mortality Rate fell to 254 per 1000 as against 301 in 2003.

Fertility rate remains a challenge at 2.7; the goal is 2.1 by 2012, with Himachal, Delhi, Punjab, Andhra, Maharashtra, Kerala, Tamil Nadu and West Bengal reaching the target.

Another major development of the past year has been the revival of vaccine PSUs, which former Health Minister had closed down. Crackdown on spurious drug makers is also on even as India this year produced its first indigenous influenza vaccine following the H1N1 outbreak.

Environment: Environment Minister Jairam Ramesh announced the setting up of the National Institute of Himalayan Glaciology at Dehradun (Uttarakhand). Another step was the Indian Network on Climate Change Assessment (INCCA), a network of scientists to publish peer-reviewed findings on climate change in India.

The ministry can also be credited for setting up of specialised 'green benches'. The Parliament recently approved the long-pending National Green Tribunal (NGT) Bill to quickly dispose environmental protection cases. Recently, the Ministry and the Survey of India also launched an initiative to map the hazard line along India’s coast.

Railways: Indian Railway has been as usual a success for the UPA government. It achieved higher growth targets and implemented policies, which would attract train travel. It also suffered a few accidents that showed lack of emphasis on safety.

The earnings of Indian Railway have been on the rise. Progress has also been made in the implementation of various projects.

To conclude it can be said that, the undercurrents are positive but there are lessons to be learned from UPA's experience in the six years that it has been in office in two innings. The major challenges of inflation, of internal and external security, of raising the levels of manpower productivity and of speedier justice need to be addressed more strongly and effectively. The coming next four years will be more tough testing time for the UPA government's second innings.