Manmohan steamrolls "reforms"

Simon Denyer of the Washington Post with his article headlined "India's 'silent' Prime Minister becomes a tragic figure" appears to have woken up Dr Manmohan Singh from his deep slumber. In a span of two days, Singh has steamrolled all opposition to roll out market friendly reforms measures. It appears that vintage Manmohan is back, though too late to undo the damage done so far due to policy paralysis.

First, Singh touched the holy cow in diesel and LPG subsidy. Both have been hit, so that they could be linked to market prices in future. The two politically sensitive issues had been red-flagged by UPA alliance partners time and again. Secondly, FDI in aviation and multi-brand retail were also approved. The lavish menu spread by Singh also included disinvestment in public sector units.

Importantly, Singh has gushed these "reform" measures, after his colleague and former Finance Minister Pranab Mukherjee exited his Cabinet to enjoy the comforts of the Raisina Hills. Also, Singh's confidence apparently comes from P Chidambaram as the Finance Minister. Chidambaram had been the darling of the market for years. So, stock market has been singing to his tunes since he took charge of the Finance ministry.

After knotting India into a nuclear pact, the US had been desperate to get the FDI route in multi-brand also opened. The grapevine had been that in the last days of Mukherjee as the Finance Minister, within an hour of his landing in the US to attend a function, a concerned Hillary Clinton had rung up him to ask when was the FDI in multi-brand retail being approved. Mukherjee is said to have responded saying that he was in the US for some other function. 

Also, every criticism of the Manmohan Singh government invariably ended with one prescription, that the FDI in multi-brand retail should be allowed. Such has been the noise in its favour, that top policy makers of the UPA have opined that the FDI in multi-brand retail can solve all woes of India; fighting inflation, curbing unemployment, getting good prices for farmers. So much so that the Gandhi family scion had taken recourse to arguments like potatoes, which were wasted by farmers in Uttar Pradesh, would fetch better price once it was allowed. 

The clamour for FDI in multi-brand retail could well be understood by the fact, that it allows the US and others to tap the Indian market in big ways. The collateral damage would be loss of jobs in the existing retail trade and likely cartelisation of the retail market once the sharks of the world kill millions of small shop-keepers. Also, many of the American consumer produces currently having no demand in India would on the shelf and backed by aggressive marketing a new market would be created for them.

Therefore, Singh has done great favours to the US. First, he revived the "dead" nuclear industries there and now he can revive the job market there.

Secondly, FDI in aviation may not be much of a concern for most. Because, the inabilities of Indian airlines operators have demonstrated that they needed the FDI booster. But the same can not be said for the multi-brand retail where money, technology and management do exist within Indian companies. 

However, Singh has taken the high road to steamroll his "reforms". But his highway is full of potholes. The Trinamool Congress chief Mamata Banerjee has been a sworn enemy of FDI in any form. The Samajwadi Party would not be able to face people in UP if Akhilesh Yadav allows FDI in multi-brand retail. The Opposition is already baying for the blood of the UPA. 

The urgency with which Singh has pushed through his "reforms" signal two things; firstly that the mid-term poll is very much on the card and secondly these steps are of a ruling class fast drowning and needs anything to clutch onto.