PM speaks his mind: But his government needs to look inward

By Sushma Ramachandran

Prime Minister Manmohan Singh appears to be in a mood to speak his mind. In a series of speeches lately, he has made blunt comments about the state of the economy and the role of private industry. The question is: what has prompted the prime minister to suddenly shift from his usual moderate tone to aggressively talk about the ills affecting the country.

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Is it frustration at not being able to implement more economic reforms or a non-politician's exasperation at not being able to bring the fruits of economic growth down to the grassroots level? Whatever the answer, it seems that after three years of United Progressive Alliance (UPA) rule, he is unhappy on several fronts.

The first speech that made waves was the one highlighting the "cancer of corruption" affecting road construction projects. While it must be appreciated that our honest prime minister is worried about corruption, the fact is the government itself is the main offender.

It would have been more in the fitness of things if he had proposed steps to deal with the cancer rather than merely expressing concern in the manner of an ordinary citizen. Granted that he was referring mainly to rural roads that come under the purview of state governments, the same issues pertain to national highways where the central government has a big role.

In the case of these major trunk routes, the central government should be able to introduce safeguards so that contractors build roads that are not just cost efficient but durable and long lasting.

The second significant address by Manmohan Singh was to the CII where he looked forward to inclusive growth by bringing the fruits of development to the poorest of the poor. He also urged industry to rein in the high salaries of CEOs along with avoiding wasteful and conspicuous consumption like at lavish weddings. These are the words of a man who himself believes in austerity and moderation in personal and public life.

It was harking back to the 60s and former prime minister Lal Bahadur Shastri, a man of Gandhian values who made the nation stop eating cereals at weddings and promoted a low-key lifestyle. The change in outlook from that era to the 21st century and the growth of a materialistic lifestyle in urban centers has been studied and commented on ad infinitum in recent years. The very fact that obesity has become a major urban disease speaks for itself.

Unfortunately, these are the side effects of liberalization and reliance on market economics. It is like a tidal wave and Manmohan Singh's comments, while reflecting a welcome sensitivity to the prevailing trend of ostentation, are more in the nature of King Canute trying to stop the waves from moving forward.

As far as CEO salaries are concerned, their rising graph is moving along with soaring wages of the rank and file in private industry. Even fresh management graduates from IIMs are getting Rs.10-15 lakhs (Rs.1-1.5 million) per annum. Besides, the chief executive's remuneration is usually in line with the broad parameters of wages in a particular sector. It would be a rare corporate that gives a huge salary to the chief executive if the company's profit graph is not soaring upwards.

No wonder then that CII President Sunil Mittal sounded a note of caution against any move to control private sector salaries. Private industry is already worried about plans to introduce reservation in the corporate sector and the comments on high salaries are seen as another retrograde step. Manmohan Singh's proposals to curb salaries may seem misplaced since it was his liberalization initiatives that led to dismantling of the old system of government controls on top management wages.

It was at a third venue, the conference of chief ministers on power supply, that Manmohan Singh also pulled no punches and stressed that the benefits of 8 percent growth would be diluted unless sufficient power was made available. He spoke of the 35-40 percent transmission and distribution losses as well as the fact that only 50 percent of the target of power capacity addition had been achieved in the 10th plan.

The data indicates a serious crisis in the power sector, but that has been known for quite some time. Clearly, the UPA government has not been able to improve the situation much over the last three years.

The candid tone and tenor of the prime minister's latest speeches seems to reflect a frustration over the inability to move forward towards the goal of the UPA government to provide "roti, kapda and makaan" to weakest sections of society. On the plus side, the frank admission that much needs to be done is refreshing and highlights a sincerity lacking in much of the country's political leadership. But it also reveals an underlying weakness in the process of governance.

If the UPA government has failed to tackle corruption, power shortages or to achieve "inclusive" growth, it will have to look inward and make much needed policy corrections. And Manmohan Singh will have to act fast on this front since the present government has only two more years to meet its cherished goal of inclusive and rapid growth.

(Sushma Ramachandran is an economic and corporate analyst. She can be reached at [email protected])