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Thursday, 25 December 2014 06:10
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A statesman, and India’s most under-rated reformer

Statesman, gracious, charming, witty, great repartee … the kind of adjectives that come to mind immediately while talking of former prime minister Atal Bihari Vajpayee, the latest entrant to the list of Bharat Ratnas. Vajpayee is best known for the Pokhran blast that catapulted India to the nuclear-haves club, his peace efforts with Pakistan and, for the Modi-baiters, his famous raj dharma comment after the Gujarat riots. Few realise, however, that Vajpayee is India’s most instinctive reformer, ahead of even the late PV Narasimha Rao who opened up the Indian economy, but with an IMF gun to his head. If Vajpayee managed all his reform without any huge outcry, it probably had to do with his quick wit, natural charm and ability to be self-deprecating at the same time, best symbolised by his retort to an ardent fan asking him to remain atal (firm)—“Atal toh hoon, lekin na bhooliye ki saath saath Bihari bhi hoon!” It was only a Vajpayee that could get away with such a politically incorrect remark. Nothing was more politically incorrect, of course, than his famous retort to Ram Vilas Paswan who said the BJP had no Ram in it while his (Paswan’s) name had Ram in it … “Paswanji”, Vajpayee was quick to retort, “haram mein bhi Ram hota hai !”

It is difficult to say which was Vajpayee’s biggest reform, and though the India Shining campaign backfired on him, as did the decision to change allies in Tamil Nadu in 2004, most of India’s recent economic success can be traced back to measures taken by Vajpayee. If the government today is considering raising public investment to kickstart growth, it just has to look back at Vajpayee’s ambitious Golden Quadrilateral programme—R1.9 lakh crore has been spent on this since—that has continued to be imaginatively financed since through a road cess; under Vajpayee, a tiny government department (NHAI) began functioning like a super-efficient private sector firm. Vajpayee paved the way for introducing VAT across the country and rationalised VAT rates around a CENVAT. He enacted the fiscal responsibility Act which, by adding tremendously to India’s savings pool, was responsible for the stunning growth turnaround seen in the NDA years—from -0.8% of GDP in FY00, public sector savings rose to 2.3% of GDP in FY05 when the NDA demitted office and to 5% of GDP in FY08.

And many years before the US Fed realised the importance of saving financial institutions to ensure public faith was not eroded, Vajpayee incurred the wrath of free-market fundamentalists by deciding to bail out Unit Trust of India’s failing US-64—ironically, it is UTI’s shareholdings in L&T, ITC and Axis Bank that are likely to save Modi’s budget. Insurance FDI, touted by successive governments including Modi’s as a great reform, was also a Vajpayee initiative. It was Vajpayee’s sagacity that allowed India to move from fixed licence fees that telecom firms struggled to pay, to a more rational revenue-sharing arrangement. If this historic deal is what pushed India’s telecom revolution, it was similar savvy in the face of collapsing crude oil prices—this is when the government decided to free up prices subject to a partial subsidy in LPG and kerosene—that resulted in private sector firms like Reliance and Essar lining up to invest in petrol pumps; ironic that, in the face of a similar collapse in oil prices, the Modi government is dithering over decontrol. Unlike the Congress party that never honoured Narasimha Rao, however, the Modi government has done well to honour India’s foremost reformer.

 

 

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