Now, U-Turnomics

When the Narasimha Rao-led Congress regime launched reforms in 1992, Manmohan Singh had to battle with the weakest consensus on the tough set of economic policies before the government. Close to a decade later, the confusion in the party indicates that the Congress has come a full circle: the former finance minister is now battling with a strong consensus on weak reforms.

The party's latest decision to review economic reforms, understandably, upset Manmohan Singh. He has scrupulously avoided the media, maintained a token presence at party meetings and has kept out of all discussions and committee meetings. For obvious reasons. How could he be associated with an exercise that sought to criticise his past work? At a Congress Working Committee (CWC) meeting, he even said that it would not be possible for him to have a meaningful discussion with "economic illiterates".

Traditionally, the Congress has followed a distinct left-of-centre approach to economic policy, which radically changed in the '90s. The current phase of reinventing the Congress started with the perception gaining ground among party members that liberalisation is the root cause of all its current problems. Says a senior party official: "The Congress seriously believes that the reforms have lost votes for the party. And that the Congress should try to be visibly pro-poor, show up what is called the human face. We should return to populist measures like Indira Gandhi's garibi hatao programme."

Right now, the target areas are: subsidies, wto, disinvestment, agriculture and small industry. Says Pranab Mukherjee, the reforms committee chairman: "Disinvestment is not a mantra. Is it economically prudent that you dispose of your capital assets, especially profit-making ones, and meet your consumption expenditure? Similarly, we do feel food subsidy is sacrosanct and subsidy on kerosene and fertiliser essential."

The socialists got a further leg up when Manmohan Singh failed to win a Lok Sabha seat from South Delhi. For them, it was conclusive proof that the father of economic reforms could not even carry the urban middle-class with him, let alone the poor. But Singh continued to enjoy the support of party president Sonia Gandhi. At the ficci annual session in March, Sonia Gandhi had reiterated her party's commitment: "In the previous Parliament, it was the Congress that showed greater keenness in getting key economic legislation passed and that will remain our credo."

Observers say that in its efforts to project a pro-poor picture, the Congress is ending up as a party which is trying to backtrack on its past laurels. And, they add, to a major extent, Sonia Gandhi's flip-flop over the economic issues is responsible for its confused image. Even after the decision was taken to review economic reforms, Sonia Gandhi admitted that it was not a review of Manmohanomics but "an overview of the reforms process and its current status", says a source.

Yet, on March 6, while addressing a public rally in Delhi, Sonia Gandhi tried to whip up popular emotions by criticising the government for "allowing unlimited import of 1,500 items, including rice, milk, potatoes, pulses, clothes and shoes". That not only constituted an about-face on the Congress' own 1999 manifesto but also conveniently glossed over the fact that the wto commitments had been given by its own government. Also, she targeted the sharp rise in pds foodgrain prices. Forgetting that it was because the issue prices had not been raised for the last six years, in tandem with the annual support price hike, by both the Congress and the nda governments that the latest hike had to be so sharp.

Many in the Congress privately admit that in its desperate effort to pursue a separate identity from the BJP's on economic policies, the party has been forced to scout for a new stand on reforms. Defends Pranab: "How can benefiting the poor be seen as volte face? We just want to correct the perception that we were anti-poor." But a working committee member rues: "We have to wear two caps - the politician's and the economist's - and it seems we cannot do both simultaneously while we are in the Opposition."

For now, a truce seems to have been reached with the decision on July 15 to set up a 53-member panel, with 11 sub-committees, to go through reforms with a fine-tooth comb and suggest policies. It was Sonia Gandhi's message to the meeting encouraging dissent as a path to consensus that discouraged the socialists and allowed the reformers to prevail. Now, both the pro-reform and pro-poor lobbies coexist happily in the committees. As do chief ministers of all Congress-ruled states, most of them pro-reforms. Digvijay Singh, the dynamic reformer chief minister of Madhya Pradesh, said at the meeting that it was the Babri Masjid demolition and not the reforms that did the Congress in. And socialist solutions found few takers. As for Singh, though not associated with the working of the panel, he will receive and have a say on the final report.

All this should have given a clear indication to the socialists, right? Wrong. Why else was the base paper for the meeting, prepared by Jairam Ramesh and overseen by Pranab Mukherjee and Manmohan Singh, which made a strong pitch for continuing on the same path of reforms, suppressed? Members say that's because at the last moment, Sonia balked at taking an overt pro-reform stand and went along with the proposal for "overview" instead.

What the committee will achieve remains in question. Says an observer: "The draft that will come out of the deliberations will be a classic example of sitting on the fence. It will be a meaningless agenda carrying gems like 'on the one hand, huge expenditure on subsidies is unsustainable and on the other, food subsidy should not be cut'. It will have hardly anything that can be constituted as a change in policy." Madhavrao Scindia, leader of the Opposition in the Lok Sabha, however, maintains that the Congress will take on the government in the monsoon session of Parliament on all the issues where the line of distinction between the party and the BJP seems smudged.

None, including the BJP, need quibble over the five-page issues for discussion (replacing the base paper) circulated among the committee members - who can disagree with the fact that non-performing assets in banks should come down to 3-4 per cent in the next 3-4 years? Says Jagdish Shettigar of the BJP economic cell: "The Congress cannot agree with us because in India, the Opposition is not supposed to agree with the ruling party. If they do, they lose their identity. And the Congress top leadership is not in a position to decide. The best thing for them would be to carry on with their old plan and criticise us on the implementation."

That may well happen. Especially since one of the imperatives in the issues paper is "quantitative restrictions on imports to be phased out by April 1, 2001, and thereafter protection given through tariffs and exchange rate". Notice the flip-flop again!

Even Singh may be finally hitting back - he is believed to be lending his might behind a position paper being prepared by some academics which will uphold the priorities in economic reform and the future agenda. If not Manmohan, Manmohanomics may still win the day.