Saturday, January 07, 2006

Even Lohiaites are learning

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Even Lohiaites are learning

And you thought Buddha was the only one to let reforms sweep his ideological cobwebs away; look at latest converts


Posted online: Saturday, January 07, 2006 at 0000 hours IST

If, like this writer, you too are a believer in economic reform leading to free markets, shrinking of the state’s role in economics and unshackling India’s creative and entrepreneurial energies, and are dismayed at the road-blocks and rollbacks at the national level, look at some of our states for the good news. Or rather look at what some of our state-level politicians are doing, and the picture won’t look so bad. And I am not talking only about Buddhadeb Bhattacharjee.

The cause for this cheer comes from a category of politicians you would last expect to break into headlines with their reformist actions. The Lohiaites, over the decades, have been the most retrograde of all socialists, serving a murderous cocktail of pseudo-socialism and pseudo-nationalism. But today, the leading lights of that uniquely Indian, or rather Hindi heartland, faith are breaking away from that past. The Lohiaites have been one of the main causes, and also the biggest beneficiaries, of the Congress party’s decline in its traditional strongholds. Between Bihar and Uttar Pradesh they control twice as much political territory. So far they had resisted the winds of change even more stubbornly than the Left. But the picture is changing now, and changing for the better.

I have maintained for a long time that among the last sectors to be reformed in India will be the railways and real estate. That is because of the great political vested interest in discretionary powers, patronage and, consequently, the scope for money-making both provide. That is why Laloo Yadav’s stint in the rail ministry has been such a pleasant surprise. Please do not be blinded for one moment by his obstinate refusal (so far) to increase passenger tariffs, or inconsequential populism like promoting milk, lassi and earthen kulhads in his trains. One look at the railways’ financial performance, even in two years of rising fuel prices and increased competition from truckers on rapidly improving highways, and you know there is a good news story in the making.

THE cynical explanation, of course, is that just because Laloo has been so embroiled in Bihar politics, two elections and his court cases, he may not have had any time for his ministry and so its officials have been free to do the good things. But that is not how things work in our system where bureaucracies tend to be even more possessive of state power and control than politicians. In fact, no reform ever takes place unless pushed and supported vigorously by the political leadership. Ask any senior member of the Cabinet and he will tell you Laloo has been a particularly good minister, particularly on economic issues. He has almost never blocked any reformist decision and has taken a very constructive view on new ideas of public-private partnerships, special purpose vehicles (SPVs), even outsourcing of services, all things that Rail Bhavan bureaucrats would normally abhor.

That is why my most cheerful headline in a long time is Laloo opening up the railways container business to the private sector. Sure enough, he had promised this in the last railways budget. But so did Chidambaram promise 49 per cent foreign equity in insurance in his 2004 budget and now nobody is even talking about it. The real test is not making reformist promises, but in delivery.

Similarly his fellow Lohiaite (though now political adversary) Nitish Kumar has started his innings on a reformist note entirely unfamiliar, and unexpected in Bihar, and I am not talking of his television commercials soliciting private investments in his state. One of his first actions has been to unbundle his completely moribund electricity board into four zonal corporations. As is to be expected, his unions have threatened to go on strike. But some day, somebody, had to bell that cat in a state where a majority of the villages are not yet electrified and where the electricity board makes a Rs 3.5-crore loss per day. It is early days yet, but to see his initial actions in perspective you have to consider the fact that chief ministers of at least two major Congress-run states, Punjab and Kerala, have not yet dared to do this.

My third cheering story of the week did not even make front-page headlines. I found it buried on one of the commodity pages of Business Standard this Thursday and from my reading at least it seemed as if the reporter had missed the point a bit. The story complained that government-owned sugar mills were struggling to get steady cane supplies because private companies in the state were offering prices higher than the state-mandated minimum support price of Rs 113 per quintal. Some private companies, the report said, were offering up to 15 rupees more than that. Some were even luring the farmer with freebies like tins of desi ghee and sacks of DAP fertiliser (needed in large amounts in this, the rabi wheat season).

NOW this is in a state that was notorious for starving sugarcane farmers by delaying payment for their supplies to its own sugar mills for years together. In fact it was in response to this that Rahul Gandhi had made his maiden intervention in the Lok Sabha to get the cane farmers’ “arrears” released. If in that very state the farmers are now not merely being paid on time, but paid more than the minimum support price and also wooed with freebies by private companies, isn’t that a story of reform?

Whatever else you may say about the Samajwadi Party government and the Mulayam Singh Yadav-Amar Singh combine, their basic approach to the sugar business has been reformist. Private sugar mills have blossomed and instead of begging, pleading, agitating, blocking roads and burning buses to get his own dues, the farmer is now being wooed as a supplier crucial to the sugar business. Now if that isn’t the very definition of reform in agriculture, what is?

There will be crony capitalism as long as there are politicians and businessmen. No politician in India can claim sainthood on that. But the test is, what does that cronyism yield. Even under the darkest-sounding Lohiaites, Uttar Pradesh has persisted with power reform, riding roughshod over the unions (and, of course, you do not expect the Left leaders to go protesting when this happens in non-Congress, non-BJP states, just as they embrace reform so wholeheartedly in states they control). Mulayam is trying to build modern townships, and while allegations of money-making will be there whenever a politician touches real estate, at least he is not muddled in his head as the Congress has been in Mumbai and Delhi on the issue of urban renewal.

These are early days yet and much can go wrong. But what these three Lohiaites are telling you is that, just like Buddhadeb Bhattacharjee, they have discovered that plain, socialist populism and rhetoric has outlived its use-by date. The key to not merely defying anti-incumbency but the very survival in politics, is now performance on issues that matter: bijli, sadak, pani, padhai, naukri. It is not possible to do any of that without reforming. Ideology be damned, it’s the politics, stupid. And you cannot run your politics any more without free market reform, private investment, modernisation. When even the Lohiaites buy that mantra, you know India is on to a good thing.

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