Shaping a Legacy

Manmohan Singh has returned as Prime Minister with a renewed mandate but his challenges are larger than before

“I don’t get angry, I don’t want to use harsh words. They are our colleagues and we have to work with them. But they also have to learn to work with us”

These words uttered in August 2007 came as a shock, an indication of steel in a man who too many had written off as a factotum of the Gandhi family. They were also an indication of how little the country knew a Prime Minister who had first entered the government as Economic Advisor in the Commerce Ministry as far back as 1971. The country has got to know Manmohan Singh a bit better since.

The mandate of these elections has now left Manmohan Singh facing another challenge, perhaps the toughest one of his extended career. That may sound strange said of a man who took India through the fiscal crisis of the early 1990s as part of a minority government, but if the opportunities are aplenty—no allies constraining him and a party that will leave him free to govern—so are the challenges: a worldwide recession, a new American President, a neighbourhood in turmoil, and an increasing threat from Naxalism.

Two years ago, he had articulated his departure from Nehruvian policy in very Nehruvian terms: “India, with a billion people and with such a diversity of languages and cultures and religions, with its functioning democracy and respect for Rule of Law, is a unique country. We are a role model for the world… how can we ever become anyone’s satellite?”

George W Bush has given way to Barack Obama in the White House since; the new relationship started off on a wrong note. President Obama, with naivete that seems congenital among US Democrats, had told Time in October 2008, “Kashmir in particular is an interesting situation where that is obviously a potential tar pit diplomatically. But for us to devote serious diplomatic resources to get a special envoy in there, to figure out a plausible approach, and essentially make the argument to the Indians, you guys are on the brink of being an economic superpower, why do you want to keep on messing with this?”

Such words forced India to threaten turning Richard Holbrooke, US special envoy for Pakistan and Afghanistan, into a persona non grata if his mandate were to include either India or Kashmir. It didn’t come to that, but Holbrooke has continued to visit India and talk about Kashmir, if only ‘unofficially’.

The truth is, real progress on Kashmir cannot be achieved under external pressure. Rather, domestic politics holds out far greater hope. In his last term, Manmohan Singh had come close to agreeing on a slow demilitarisation of the Valley, but Pakistan’s internal turmoil stalled such prospects. This time, expect the PM to focus far more strongly on partial autonomy for the Valley, which could include a phased withdrawal of armed forces. The close relationship between Rahul Gandhi and Omar Abdullah can only help.

Beyond Kashmir, the immediate challenges lie in working with the US on Pakistan and Afghanistan without being seen to do its bidding. Says Arundhati Ghose, former Indian representative to the UN, “Pakistan poses a potent nuclear threat, especially if India is not in the loop regarding the command-and-control of its nuclear weapons.” The one country that allows India some leverage in Pakistan, is Afghanistan. An election there is due shortly, but while Hamid Karzai is a friend of India, the US is already backing others for the job. Manmohan Singh will have to demand a major say in Afghanistan to retain some leverage with Pakistan.

But that would just be the beginning. India’s entire neighbourhood appears to be smouldering. Says Salman Haider, former foreign secretary, “Manmohan Singh is likely to come up with a doctrine of stability in the Subcontinent. India has leverage here, and if it plays its cards well, it can promote stability.” In Nepal, India needs to counter the China card, in Sri Lanka it needs to use its influence to bring about a political reconciliation. In Bangladesh too, there’s an opportunity to work with a friendly regime.

The broader global challenges are economic as much as political. The worldwide recession has already initiated a rejigging of international financial institutions. India wants a greater say at the high tables, but the best way to ensure this is to enhance the country’s economic clout. This demands work at home. Economists who’re focused narrowly on policy often ignore the wider realities of politics, particularly in contrasting the pace of reforms of the Vajpayee years with that under Manmohan Singh. What they should consider is the contrast in electoral response to the two regimes’ policy framework. While the NDA offered ‘reforms’ dear to particular business lobbies, the UPA set the stage for an overall acceleration in savings, investment and economic growth (up from an average of about 6 to 9 per cent), while using the tax bonanza to finance such initiatives such as the NREGA and farm loan waiver. The new mandate now allows another phase of structural reforms and faster growth.

The UPA’s flagship welfare programmes, meanwhile, are only going to expand. Not only do they seem to have worked, even if in parts, they have also yielded political capital. But large expenditure on such schemes leaves the government with little for infrastructure. Now with the Left out of the way, receipts from state disinvestment in saleable public sector units (PSUs) could fund the gap. The Centre could well consider a 5-15 per cent dilution of its equity in several of these to garner as much as Rs 100,000 crore. “The PSU disinvestment pipeline is fairly strong,” says Prithvi Haldea, chairman, Prime Database, “There are nearly 60 large firms that are waiting to enter the capital markets. It should be the new government’s
top most priority.”

Infrastructure is critical—its lack not only chokes the economy, its uneven spread ends up creating grievances that Naxalites and others exploit. The PM has called for a reality check here, and a reform-oriented Home Ministry could play a role. Infrastructure in Naxal areas can only follow a reassertion of the state’s authority. A new National Counter Terrorism Centre (NCTC), working under the IB, has been mooted. It envisages joint commands with central and state representatives for Naxal-affected areas and a chain of intelligence monitors that will make use of the kind of inputs that could have prevented the 26/11 Mumbai attack. The PM is aware that the much-touted National Investigation Agency (NIA) has been a non-starter. It seems some of that experience has gone into shaping the NCTC. Apart from that, there are police reforms to push.

All said, Manmohan Singh faces an additional challenge. In the past, he was consistently underestimated, almost expected to fail. Now, he has the burden of heightened expectations.

With additional reports from TR Vivek, Ninad D Sheth and Rahul Pandita

CongressIndo-US relationsManmohan SinghPMPrime Minister