Question & Answer session with P. Chidambaram

Topic  :  Is Politics Overtaking the New Economy?.

Speaker  :  P. Chidambaram

 Q.  Nitin Sareen:

 I am engaged in own chocolate manufacturing homemade business.  You see, in India, if anybody wants to survive, whether to take example of a politician or a businessman or any MNC, you have to cater to mass market, you have to take due consideration of the requirements of a common man.  And on one side I see that you, take the latest example of Nandigram and the Posco project, problem with Posco is that it is facing a problem of land acquisition.  So you have dual responsibility – on one side you have the responsibility to lift foreign investment thereby to help the economy grow and on the other hand you have to take care of the consent of the Left Parties and of the common man – because these are actually the people who help in electing the new government – everything is being controlled by them.  So I want to know how you strike the balance between both of them?

Ans. Well, I thought I tried to explain.  It is not easy because the current state of politics, the very large number of regional parties, in a coalition or supporting a coalition, have necessarily to defend their interests.  They are political interests, and they are states interests.  And when they do so, they come into conflict with other regional parties or other coalition partners or they come in conflict with sound economics.  Therefore, the task of forging or weaving a policy out of these different strands of opinion, is not an easy task.  Take your SEZ policy.  Now the vowed policy of the West Bengal Government is to promote industry.  And we all know that industry requires land.  But when they promote industry, and in this case, we are promoting private capital as well as foreign capital investment, which is a sign of the maturing of that political party.  But they run into conflict with sections of their own people and they run into conflict with those who espouse the interest of the classes that are affected.  When you take land from farmers, you run into conflict with the owners of the farmland in your own state, you also run into conflict with civil society, which espouses the cause of the owners of the farmland. And then to weave a policy from, make a policy in this atmosphere is not very easy.  It is all right for Mr. Shankar Aiyer to say the GOM did not resolve the issues of the SEZ, it is the media which resolved the issues of SEZ.  Perhaps the GOM should put out a newsletter at the end of every meeting.  We also debate, but the point is no GOM, no Cabinet can share its debates with the people.  We can only share the conclusion.  And it is not easy to reach a conclusion when they are so many interests clashing with each other.  When we reach a conclusion we shall certainly share it.  We reached a conclusion about say the FAB policy; we shared it with the people.  When we reached a conclusion about merging Indian Airlines and Air India, we shared it with the people.  But we are unable to reach a conclusion yet on the SEZ policy and what do we share?  No GOM, no Cabinet can come and tell the world, we have debated and we have not come to a conclusion.  We can only share a conclusion.  But, I think one must show a great deal of empathy for the political process that we are working today.  This is a new process and this is a very difficult process.  It is only when you are part of the process you know how difficult it is to work this process.  

Q. Mr. Quraiwala.

Sir, you mentioned, in one of your five major agendas, the inclusive growth and we have seen the benefit of economic liberalization over last fifteen years and your Budget, I think for the first we saw a great emphasis on education, health, agriculture, rural development, in terms of providing the funding and the provision for the same.  But I think there is also another aspect that the way economic liberalization have taken place in terms of policy changes, in terms of the structure, I think in the social sector, with there has not been any change in this country for last forty or fifty years significantly in the structure and the policy.  And I think if we have to bring about ongoing inclusive growth – you have taken some initiative with the ITIs, but I think many other areas where government-public partnership or public-private partnership or the structural issues – where to establish a school, for example morning paper suggested in Haryana there are about twenty-five lakh students who have been going to school and because they did not follow certain rules and there is this that they were the schools that would be closed down.  I think, therefore, we would like to suggest that  the Government needs to look at the structural reforms even in the social structure - your comments Sir.

Ans. See, when you talk about Government, I assume you talk about Central Government, State Government and Municipal Government.  Many of these issues cannot be addressed by the Central Government.  Many of these issues have to be addressed at the State level and the sub state level.  Where the issues are being addressed at the State and sub State level, there is tangible progress.  Why are poverty proportions very different from state to state?  Why are literacy figures different from State to State?  Why is infant mortality rate and maternal mortality rate widely different among the States?  It is because of the State level and the sub state level these issues have either been addressed or not addressed.  To ask the Central Government to take responsibility to address these is asking the Central Government to do the impossible.  Let us take literacy and education.  How is it that Kerala achieves One Hundred per cent literacy and why is it that a state like U.P. still has a million children every year, who attain the age of five years, and do not enter a class?  Million children every year in the state of Uttar Pradesh, do not enter school.  So, I think these are issues which have to be addressed at the State level sub State level.  The only ways to improve the quality of governance - people must hold those whom they elect to govern, accountable.  If they don’t hold them accountable, how will governance improve?  There is, no question that governance has improved in many states where there was poor governance.  But there are still large areas of country which are very poorly governed at the State level and more importantly at the sub State level.  In fact we have not paid enough attention to district administration.  That is the cutting edge of governance.  If you can deliver a sound school system, a sound system of primary health centers, a sound system for distributing drinking water, building connecting roads at the district level, not only will the quality of life improve for people, but there will be so much economic activity generated by this that India’s growth rate can be propelled to a higher plane.  Therefore, we must ask ourselves the question what is the quality of people we are electing at sub state and state level and not only look at Parliament and the Government of India.  There is so much to be done at the state level and the sub state level.

Q. Nitin Shukla:

  Sir, do you think we need to take a fresh look at central, state and concurrent list of subjects to ensure accelerated and inclusive growth, particular since the list was drawn fifty-sixty years back and probably it needs a fresh look?

Ans. See, there are two contrary pulls today in the politics.  One section believes that since states are neglecting their responsibilities, the center must take over more and more responsibility in that area - example primary education, primary healthcare.  These are subjects which always were entirely within the state jurisdiction.  But today we have Sarva Shiksha Abhiyan, we have the mid-day meal scheme, we have the NRHM, all given by the center, because after patiently putting up with state neglect, civil society is demanding and sections of the polity are demanding that the center take over greater responsibility for these functions.  The other strand of opinion is that the center has no business in these areas and in fact the center should shed some of its responsibilities in favour of the states.  For example the states are demanding that the right to levy service tax must be taken away from the center and given to the states.  The states are demanding that in many areas of governance, the center must wash its hands off.  Just hand over the money to the states and the states must implement it.  Now, I think that this debate has not reached a final conclusion.  But over the last ten years, my assessment is that more and more the debate is swinging in favour of those who want the center to play a more active role.  In fact every new programme of the center, you will notice in the last ten years, has been in areas which traditionally and constitutionally belong to the states.  We are now taking over even rural electrification - the Rajiv Gandhi VidhyuthiKaran Yojana is rural electrification; the NRHM is basic medical care through our trained health worker in the village;the Sarva Shiksha Abhiyan.  Take mid-day meals scheme.  The mid-day meal scheme was introduced by Kamaraj in Tamil Nadu when there was no question of the center playing any role – entirely designed, funded and implemented by the State Government.  Today the entire mid-day meal scheme is driven by the Central Government.  I don’t know how the Center will be able to manage all these responsibilities.  But, if you ask civil society, they will tell you that since the states have neglected it, it is now the duty of the center to take over these responsibilities.

Q. Mr. Bajaj
  Mr. Finance Minister, we recognize the reality of the coalition politics.  But what we are concerned about is that while the majority cannot suppress or ignore the minority partners, the minority cannot ignore or suppress the majority.  Our perception is that the tail is wagging the dog and not the other way round.  And specially when the Chief Minister of the minority body seems to be in consonance with the three aces we consider – the PM, you and the Deputy Chairman of the Planning Commission.  So we have tremendous hopes and can industry help you in this?

Ans. Well, certainly industry can help if it stops complaining about the little tweaking of a tax rate here or a tax rate there.  Industry is doing well.  I have repeatedly said it and let me offer my congratulations to Industry.  The service sector is doing well, let me offer my congratulations to the service sector.  You are able to attract investment, you are able to attract technology, you are inventive, you are innovative, you are willing to break with tradition and experiment with new forms of corporate governance, families are willing to shed their responsibilities and hand over to professional managers, all this is a sign of industry maturing and that maturing of industry is bringing huge profits and huge dividends to industry.  You have earned it.  Keep it.  But when Government turns its attention to some sectors, which have been neglected – they are our own people, and for that purpose we need to raise some money.  I think industry must willingly share that burden.  No heavy burden is being put on industry.  In fact I have repeatedly said it privately, publicly and within the Cabinet, I am betting on growth and I am betting on growth to be driven by industry and the services sector.  Why would I do anything to affect growth?  Without this growth where is the question of inclusive growth?  And without growth where is the question of funding inclusive growth?  So, I want industry to recognize that there are compulsion which require us to address sections of people who have been neglected and when we do so, and we do increase the burden to some extent upon industry, industry must willingly bear that burden – number one.  Number two, industry must also recognize that it has a role to play in macro economic stability.  You can’t look at only your balance-sheets.  I, around March 15th, have a habit of looking at balance-sheets.  And I am very happy to see the very healthy growth of balance-sheets.  However, beyond your balance-sheet you will have to play a role in macro economic stability – the one thing that is affecting or to some extent throwing a spanner in the works as far as macro economic stability is concerned, is core inflation.  And I have said this before and I will say this again.  Please don’t allow core inflation to be entrenched.  In the last week for which we have figures, the rate of inflation for primary articles has moved down, the rate of inflation for fuel power and lighting has moved down, the rate of inflation in the manufacturing sector is moving up.  And therefore, it is in industry’s interest, in the long-term interest of industry, to please pay attention to the role you can play in macro economic stability.  That is the best you can do.  The best you can do is recognize that beyond your balance-sheets you have a role for macro economic stability.  And if you will be kind to me a little more, that is the best role you can play. 

Q.Mr. Aman Nath:
While we try and do everything right as we can, and we are hugely appreciative of the nine per cent growth, what I think the people here are, they are not suggesting nine per cent growth without the Government, but perhaps with a better Government and I think that in this case the bureaucracy’s role is very important, because they often operate as if they were alone to themselves and when we are harassed or when they demand corruption of us and we don’t back them, then everything comes to a standstill.  I’ve heard you say that we shouldn’t encourage corruption, but you know if your electricity is cut, if you don’t get licenses what are you supposed to do?  It is not just the nine per cent, it could be fifteen per cent also, if we have good governance and a bureaucracy that is answerable?

Ans. I think it is unfair to paint the whole bureaucracy with the same brush.  I think a bureaucracy is like a horse – a horse is as good as a rider.  If you know to ride your horse, you can get things done.  It is only when you don’t know to ride a horse, I don’t if it is right – the horse takes you for a ride, I suppose.  Now, having said that, I recognize that we cannot cleanse the stables by simply a fiat or a dictate.  That is why the Government has given you, you means ‘the citizens’, powerful instruments to assert your rights. The Consumer Addressal Forum is extremely active these days, the Right to Information Act, Public Interest  Litigation – these are powerful instruments, available to you under the law today to expose corruption, to expose inefficiency.  It is the way you use these instruments.  I would urge you to use these instruments to expose the bureaucracy, expose governance failures and expose corruption.  But, I don’t think we should plead helplessness.  Today, individual in society is far more empowered than what an individual twenty years ago was.  Twenty years ago, could you have imagined an individual demanding information from Government? Could you have imagined anyone going to a consumer forum and getting a award because his baggage was lost by an Airline or because some information was refused to him and his passport was delayed?  Today I think individual is more empowered.  But I think you should use this power to place a check on the bureaucracy, place a check on Ministers and Government.