It took double-barreled force to goad Manmohan Singh into the ambitious and controversial gambit of fresh FDIs and disinvestment. One was a desperate diktat from Congress chief Sonia Gandhi who had just returned from the US—“Perform or Perish”. The other was the damaging feedback from the ground after Coalgate. Ministers—Ghulam Nabi Azad,
P Chidambaram, Salman Khurshid, Ambika Soni, Pawan Bansal and Jyotiraditya Scindia—fielded to tour the states to contain the fallout of the coal scam, came back with gloomy tidings. The UPA’s negative image had reached a tipping point. Unless something drastic was done to change the dismal discourse, the damage to the UPA would be irreversible.
To win the battle of perception, the Prime Minister was asked to decisively break his silence, seen as a big liability. Normally ridiculed for his reticence, Manmohan is suddenly talking non-stop. On Saturday, he used his address to the Planning Commission (which was meeting to approve the 12th Plan document) to try and put a positive spin on the reforms blitz. He held aloft visions of a “trillion dollar investment” in infrastructure and spoke of “inclusive growth” in the same breath. “Without courage and risk, there cannot be higher growth,” he declared.
Almost seeming to confirm the allegations from the Left and BJP’s Rajnath Singh of the government being dictated to by the US, the American media is lapping up Manmohan’s newfound aggression, showering plaudits on him. The Washington Post, whose recent critique had goaded the PMO into reacting, called the new moves a “dramatic push”, while The Wall Street Journal hailed it as “the toughest reforms”.
Sources say the essentially Left-leaning Sonia-Rahul Gandhi team is weary of aggressive economic reform that accrues little electoral benefit. But they have come to realise that the PM needs to shore up his image. If Manmohan sinks into the murky depths of Coalgate, the Congress party will follow. The other reason for action, especially the diesel price hike, is attributed to appeasing the RBI which has refused a rate-cut unless the government did its bit to lower the diesel subsidy. The timing is seen as crucial. It is being argued that the narrow “window of opportunity’’ before Manmohan favoured the move for the cruel fuel price hike and the sudden, belated desire to open FDI in aviation and retail. The Gujarat and Himachal Pradesh elections, scheduled to take place in November-December, are to be announced within a few days. The Congress calculation seems to be that no disgruntled ally would want to pull the plug at this juncture.
When Mulayam Singh Yadav said in Kolkata last week that if even one UPA constituent pulled out, he would make his move, it caused alarm in the Congress party. In that panic was reborn this strong dose of Manmohanomics. Hard reforms do not need legislation and its accompanying parliamentary perils to implement. A UPA ally claims that it is the Congress that sat on FDI in aviation for one year “just to ensure that Kingfisher (in other words, political rivals)’’ did not benefit from the policy.
If Manmohan wanted to push Coalgate off the lead headlines in the media, he managed to. But it may also have deepened UPA’s trauma.