New Delhi: PM Mahmohan Singh shows he means business

TOI

New Delhi, 30 June 2012: The sense of relief in the Prime Minister’s Office (PMO) is hard to miss. The zeal with which furniture is being rearranged and priorities reset in North Block conveys an urgency of purpose, like a new occupant hurrying to replace dowdy fittings left behind by a previous tenant.

 

Barely was Pranab Mukherjee bade a generous goodbye, movers got to work. Prime Minister Manmohan Singh’s top aides C Rangarajan, head of the economic advisory council, economic advisor Kaushik Basu and deputy chairperson of Planning Commission Montek Singh Ahluwalia, met Singh several times to craft immediate action.

 

The advisory council held its deliberations on Wednesday and Singh issued a call to arms to finance ministry brass, urging the climate of pessimism be reversed. Ahluwalia assured a delegation that retrospective tax amendments will be revisited and finance secretary R S Gujralinstructed to redo the controversial measure.

 

On Friday, the PMO sought a review of the equally contentious draft General Anti-avoidance Rules (GAAR) seen to arm tax officials with sweeping powers. The GAAR was roundly criticized by Parliament’s finance standing committee for shifting the burden of proof on the assessee.

 

Perhaps a little discomfited by comment that PMO has been awaiting Mukherjee’s departure, the government on Friday said decisions were in sync with repeated assertions that a "dose of reforms" is absolutely essential. The claim is hardly persuasive.

 

With memories of his 1991 reforms legacy fading, the PM has his task cut out. If Trinamool Congress leader Mamata Banerjee inadvertently forced the Congress leadership’s hand on naming Mukherjee as UPA’s presidential nominee, she might have given Singh an opportunity to lead from the front. At stake are Congress’s 2014 poll prospects.

 

"It’s the economy, economy, economy," said an adviser who argues Congress’s politically loaded social agenda will be dead in the water unless the economy looks up. "If the economy does not revive, Congress won’t either" he said.

 

A consensus is growing that Congress can hope to muddle its way through corruption issues with cases like 2G becoming courtroom battles, but it will not be forgiven for a failing economy resulting in job losses, high interest rates and general price rise. "We won’t have a fighting chance," a Congress leader agreed.

 

With Mukherjee out of North Block, there are no excuses to offer. The Congress veteran was impervious to suggestions that tax authorities have become a lynch mob driving out domestic and foreign investment. "Look what’s happening. Investors were flocking to India. Now, they are coming only if they have no choice," said a senior official.

 

As Singh takes full charge of the finance ministry, he might have his best chance to press his case with the Congress leadership. Populist arguments may have to cede in the face of dire economics with the last quarter 5.3% growth setting the cat among the pigeons. "The 12th plan allocations for food security, health and education and welfare schemes need a correct assessment of revenues," said an official source.

 

The PM has a job on his hands as he might have to start by tackling subsidies that will mean increases in diesel prices and a further rationalization of fertilizer policy. With the final two years as the PM ticking away, Singh has to decide whether graft and a policy freeze will define his record.