NDA Government: Three years of performance

By K. R. Sudhaman

The NDA Government completed three years in its second avatar on October 13 this year and it has come out with a long list of achievements but it has scrupulously avoided listing how much of economic reforms it had promised have been achieved.

It is not that the Vajpayee Government has failed totally in pushing forward second generation reforms and even skeptics can no longer deny the fact that the highway project is a major step forward in pump-priming the economy. Government deserves full credit for it. But it could certainly be faulted for dragging its feet on some of the crucial reform measures including labour, disinvestment, financial sector, power and foreign direct investment apparently due to compulsions of coalition politics, more so from Swadeshi lobby and Sangh Parivar.

Some of the positive aspects of the economy are that the fundamentals are strong with inflation at around 3-3.5 per cent, foreign exchange reserves comfortable at over 63 billion dollars, exports back on double digit growth, softening of interest rates, signs of industrial recovery and comfortable agriculture production estimated at 211 million tonnes despite drought in some parts of the country. But what is worrying is slippages in targets set in the Ninth Five Year Plan which ended in 2001-02, apparently due to poor economic management that has slowed down the reform process in the last couple of years.

The Government had set an average seven per cent growth annually which was subsequently revised downwards to 6.5 per cent. It is now estimated that the average annual growth was at 5.4 per cent during 1997-02 because of not too impressive performance in the last two years of the Plan as growth dipped from 6.2 per cent in 1999-2000 to 4 per cent in 2000-01 and 5.4 per cent in 2001-02. The GDP in 1997-98, first year of the Ninth Plan when United Front Government was in power had touched a high 7.8 per cent.

In the current year, the Reserve Bank, which had forecast 6-6.5 per cent growth in the face of anticipated modest recovery, has now indicated it could be revised downwards in the credit policy to be announced at the end of this month. The IMF has already scaled down the growth to 5 per cent and NCAER to 4.8 per cent. The fiscal situation is no better with slippages in fiscal deficit targets year after year.

Deputy Prime Minister L.K Advani recently claimed that in difficult circumstances of global slowdown and recession within the country, the economy had done reasonably well, which was also acknowledged by the multilateral agencies. There is some validity in the argument when compared to the performance of some of the other emerging economies. But the fact remains the reform process has slowed down which has impinged upon the country’s economic performance.

Exports, which recorded a near 20 per cent annual growth in the first half of the nineties, slipped to a negative and low single digit growth before recovering this year. No doubt the global slowdown is partially responsible but no one can deny the fact that our exports are still not competitive enough to face the challenges of globalisation. Trade reforms which gathered momentum during the Narasimha Rao regime in the early years of liberalisation, seem to have lost steam midway.

The States are in a fiscal mess though the Centre is slightly better off as fiscal deficit is not all that alarming. One reason often given by the authorities is that implementation of the Fifth Pay Commission has put a heavy burden on states. The Fifth Pay Commission had also recommended reduction of staff by 30 per cent to which both the Centre and States have turned a blind eye.

The main ingredient for expenditure compression is downsizing on which Government has so far paid mere lip service. Admitting the slow progress in this area, a top Government official said it was time a targeted approach was adopted on downsizing. Ninety-five per cent of the four million Central Government and 5.5 million State Government employees belonged to class three and four. Most of them are redundant. Targeted approach to downsizing would provide a long-term solution on curbing expenditure rather than some tinkering by freezing dearness allowance, which may have some small benefits at the cost of unrest among Government employees.

The Government claims it had adopted a new approach to disinvestment by it’s decision to privatise public enterprises. But unfortunately when it started gaining momentum NDA ministers particularly BJP emboldened by the RSS lobby, derailed it by putting a spoke in the wheel of oil PSU's strategic sale. NDA Government started off well by initiating big-ticket privatisation like VSNL, Maruti, IPCL. However, vested interests within the Government gaining ground, the disinvestment process seems to have received a jolt. Prime Minister Atal Bihari Vajpayee and Advani say it has only been deferred for three months for a course correction but in reality the stock markets and business community have reacted adversely.

Foreign Direct Investment liberalisation is yet another area Swadeshi lobby is strongly opposed to. Within the existing regime itself, Government could have achieved much more FDI if only power sector reforms had been carried forward.

Several important economic legislations on power, fiscal, financial and labour reforms are pending before Parliament for over two years and there is no movement forward because of poor floor management and opposition from within.

In such a scenario one wonders if Government would be able to achieve eight per cent growth envisaged in the Tenth Plan. Vajpayee has promised tough reform measures. The question is will he be able to carry on these reforms with several assembly elections in the offing and general elections in a couple of years.

According to Advani, the success of the Government during the last three years is due to the "coalition dharma." It is increasingly becoming a coalition adharma with elections round the corner. Congress spokesman Jaipal Reddy is justified in summing up that all the tall claims of the Government about its achievements were "quite an anti-climax" particularly after the Jammu and Kashmir elections debacle. The question is whether the Government has the political will to take tough decisions on reforms in the remaining two years.

PTI Feature

Rise of MMA in Pakistan

By Khan Abdul Wadood Khan

Pakistan’s new unfolding democracy, driven by a split mandate and spearheaded by an unprecedented victory for Islamic fundamentalists, indeed has become the beginning of new predicament. The results of the general elections held on October 10 are surprising as well as a disconcerting to Pakistanis who wish to see a liberal, secular, modern and developed Pakistan emerge in the future.

While in the past, the clergy in Pakistan forced General Zia’s army to take over the reigns of the country as there was no other way that their extremist ideology could become the law of the land, today they have become the law makers and have an important say in framing the law on account of their large presence in the NWFP and Balochistan Assemblies as well as in the National Assembly. The Muttahida Majlis-e-Amal (MMA), a pro-Taliban conglomerate of six fundamentalist groups, has won majority in two most sensitive provinces bordering Afghanistan, which have served as the recruiting and training grounds for Islamic militants, including AI Qaida and the Talibans. The unprecedented victory of this grand alliance of the religious parties owes itself to a number of factors, the unparalleled unity among their various denominations being one of these. Others include Musharraf Government’s sudden volt-face with respect to Pakistan’s Afghanistan policy, his promise to the United States Government to use the Pakistani ground and air base for facilitating the conduct of hostile operations against the Taliban, the presence of the personnel of US air force and FBI on the Pakistani soil, including the freehand given to the latter to operate both in the tribal areas and settled regions in the country in order to hunt for the alleged remnants of Osama bin Laden’s AI Qaida organization.

MMA also benefited from the space created by the suppression of the major political parties. The MMA has, throughout General Musharrafs tenure, found it easier than the PPP or the PML(N) to get permission to hold rallies and public demonstration of strength. For example, secular politicians were barred from contesting the elections if they did not have Bachelor’s degrees while Mullahs were only required to have degrees from religious schools. Writing in the Wall Street Journal, eminent Pakistani journalist Ahmed Rashid commented "it appears that the army and the ISI sponsored the religious leaders, or Mullahs, to ensure that the West does not question the need for continued military rule to contain the religious parties."

But whatever the various causes of the MMA’s emergence as a potent political force, the immediate concern relates to how it will react to certain policies put in place by the Musharraf regime. The MMA is opposed to the military rule, the National Security Council General Musharraf's legal framework order and so on. MMA would insist on the restoration of 1973 constitution, the absolute sovereignty of Parliament with no institution or individual having superiority over it and the introduction of true Islamic Shariah in the country. It would also like US to withdraw from air force, bases in Pakistan.

While intellectuals are advising MMA leaders to follow a moderate path, the MMA leaders have vowed to establish a strict Islamic system reversing General Musharraf s so-called reforms. The MMA has announced that it would seek ban on co-education. Addressing a gathering of the women’s wing of the Jamaat-e-Islami at Peshawar, the MMA Vice-President and Chief of Jamaat-e-Islami said that the Alliance would set up separate universities for women. He said women should not be forced to wear the burqa but at the same time maintained that they should follow the Islamic Shariah laws. He claimed that massive participation in the rallies was a proof that both men and women want Islam in this country. The convention was clearly intended to send out a message to the outside world as to what the Alliance in general and his party in particular stood for on "Islamization" of the Pakistani society.

Pakistanis are confused as there has been no consensus over the formation of a new Government more than 15 days after elections produced a "hung" Parliament. An attempt by the pro-military Pakistan Muslim League (Quaid-i-Azam), which is the single largest group in the newly elected National Assembly, to link with Islamic groups hit a snag with hardliners raised the stakes, demanding the post of the Prime Minister.

In an interview with the Friday Times, Maulana Fazlur Rahman Amir, Jamait -e-UIema-e-Islam and Central leader of MMA said that his party would seek the constitution’s help to improve the Islamic system in Pakistan. And Chief of MMA Maulana Shah Ahmed Noorani went a step further by saying that "provincial Governments have full powers to legislate according to the constitution for the betterment of their people". Jamaat-e-Islami party head Qazi Hussain has already called for the US troops in Afghanistan to withdraw. The MMA distributed leaflets in the election campaign sympathising with the Taliban and AI Qaida.

There is thus utter confusion in Pakistan as to what is going to take place in future. There are contradicting statements from the religious alliance (MMA). While meeting some, senior diplomats of various countries in Islamabad on October 23, these leaders said that they would abide by the international agreements and would not object to proposed Iran-India gas pipeline but in NWFP and Balochistan, the MMA has got majority and is planning to implement Taliban’s agenda. Writing in The News, columnist Jameelur Rahman said that the MMAwould force the women to maintain strict "pardah" and co-education would be abolished. The cable and other electronic media may be banned. The people associated with this business are worried and confused. Most of the observers are of the opinion that the MMA in NWFP and Balochistan will have no time to look into the matters like unemployment education and health etc. Their main thrust will be on promoting rituals.

A retired chief of the army staff General Aslam Beg has said in an article that the rise of the MMA is due to the anti-US feelings. According to his assessment most probably there will be a coalition Government in Centre consisting of the King’s party and PPPP. Some minor parties and independent candidates may also join. If this is done, it will satisfy America. Otherwise situation may take an ugly turn. Aslam Beg has also pointed out that it was not a wise decision to ban Benazir Bhutto and Nawaz Sharif from taking part in election process.

US State Department spokesman Richard Boucher also agrees that Musharraf made a critical mistake by debaning them. In an interview with BBC, Akbar S.Ahmed, a former Pakistan Ambassador to UK and presently teaching in an American University in Washington said " development could spell trouble for US adding that "an earthquake has taken place in Pakistan for what is happening there is going to have an impact in the entire region." NWFP is an important province because of its borders with Afghanistan. It is the breeding ground for Taliban. Mr Ahmed's analysis have been supported by Georgetown University Professor Berger who said that Musharraf faces trouble ahead from the newly empowered coalition - "the coalition hardliners are going to emerge as partners in any condition that is going to undermine ability to maintain support for US." Former Pakistani Prime Minister Benazir Bhutto whose party came second in the elections behind PML (Q) is of the view that the "Central Government will cooperate with the US but the Provincial Governments in Balochistan and NWFP will not cooperate with the US and I think that the US will find itself increasingly frustrated in its operation on Afghanistan's tribal area which border with Pakistan. And as the American gets frustrated, General Musharraf will say, that see, I told you need a dictatorship, you don't really need a democracy."

The rise of MMA would further strengthen the grip of General Musharraf over the sinews of power in Pakistan. He is going to blackmail U.S.A. by asking for more money and machines in the name of neutralising the threat posed by the MMA. But the Americans should note that the flushing out of the remnants of the Taliban and Al Qaida from NWFP and Balochistan could become difficult if the MMA was allowed to occupy the seat of power.