New Delhi, May 20: Talking poverty is populist, talking market is reformist. Manmohan Singh today appeared to walk away from this dictum he himself might have unwittingly made fashionable with the liberalisation he initiated in the early nineties.
While it is yet to be tested if this is only an act being put on for the benefit of a coalition with its often conflicting interests, in a news conference early this morning — too early, in fact — the Prime Minister-elect said: “The priority... will be to do everything needed to wage the battle against poverty.”
The stock market was not impressed with what it heard, quickly withdrawing some of the warm welcome it had extended in a rally yesterday. Possibly because Singh said government-owned oil companies and banks would not be privatised, the market fell 74 points to 4932. “PSUs like Gail and ONGC will remain in the public sector. There is no intention to privatise them. Similarly, there are nationalised banks which will remain in the public sector. These will not be privatised.”
It is a view he has expressed earlier, too. Sale of partial government stake will, however, continue. “If they (PSUs) can’t compete on an equal footing with the private sector or become a drag on the exchequer, then by all means they will be allowed to raise resources from the market through divestment,” he added.
Singh is not turning around any policy, either his or the previous government’s, but will make adjustments — maybe because the Left, an ally, does not want privatisation or maybe because he believes that is the way forward.
There could also be a conflict between the two. As Singh himself admitted: “Life is never free of contradictions.”
But his vocabulary has changed from the days when he took over as finance minister under P.V. Narasimha Rao. Releasing market forces and dismantling controls were the slogans then, but that was over a decade ago. And the Congress went to the countryside with the campaign that India there was not quite shining.
On wresting power from . Chandrababu Naidu in Andhra, the Congress government promptly decided to make power free for farmers, a step, given Singh’s known views, would have made him cringe. But he accepted today that even this might be justified in a state where farmers have suffered consecutive years of drought.
“Therefore, I think some amount of comfort was necessary but that does not mean there should be no user charges,” he said. “This (free power) cannot become a norm for all public services. Wherever possible we must have the listed user charges. There is also scope for cross-subsidisation.”
He is not overturning his economic beliefs, but he is ready to compromise.
In an acknowledgement of the “good work” started by the previous government, Singh said the national highway project — close to Atal Bihari Vajpayee’s heart — would continue.
Unlike the market, Indian industry preferred to wait for the government’s policy on the public sector as it is enunciated in the common minimum programme that is in the making. “We are confident that growth in the economy will be maintained by well-thought-out policies.... Singh’s statement that an investor-friendly economic policy would be followed has given some comfort to industry. Overall, he has given very positive signals,” said . Srinivasan of the Confederation of Indian Industry.
“Our common minimum programme will provide a basis to move forward.... I don’t see any problems,” Singh said.
Those who have worked with him in the past believe Singh will come out better in the bargain, having got the allies to agree to most of what he wanted.
“He will continue to push through reforms... the human face he is now trying to impart — better farm incomes, more jobs in the small-scale sector — should actually help speed up GDP growth. Instead of being a contradiction, it should act as a complement,” said B.B. Bhattacharya, the director of the Institute of Economic Growth, a government think tank of which Singh remains president.