India needs clear-cut policies

BELEAGUERED INDIAN Prime Minister Manmohan Singh, heading an increasingly unstable coalition, is feeling the heat from the series of corruption scams that have rocked his government and which are now almost searing him.

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Published: Sun 19 Aug 2012, 9:47 PM

Last updated: Fri 3 Apr 2015, 12:42 AM

The spate of recent scandals, which included the 2G telecom spectrum case, the Commonwealth Games fiasco and a few others rattled his government and led to the arrests of some ministers and leading politicians, but left Singh largely unscathed.

He may not be so lucky this time though. The latest scam to hit the United Progressive Alliance (UPA) government is the one relating to the allocation of coal blocks to private companies, when Singh was handling the portfolio. Opposition parties led by the Bharatiya Janata Party (BJP) demanded Singh’s resignation as soon as the report of the Comptroller and Auditor General (CAG) on the allocation of coal blocks – along with two other reports relating to the lease of land for the private operator running Delhi airport and a scheme to enhance India’s power generation capacity – was tabled in Parliament.

The CAG is supposed to be a watchdog, auditing the government’s accounts, but has in recent months been behaving more like an opposition party, fiercely taking on the government, leaking incomplete reports and trying to sensationalise issues. It has often over-stepped its remit, questioning government policies and extrapolating worst-case scenarios, instead of sticking to its limited role of an auditor.

Allocation of scarce natural resources in a developing economy like India – which is still transitioning from a dirigiste state to one where market forces have a dominant role to play – has always generated controversies, thanks to rent-seeking politicians and bureaucrats. Not surprisingly, most of the recent scams in India have centred around the allocation – or misuse – of natural resources including telecommunication spectrum, iron ore, land, coal and natural gas.

Singh and the UPA government might very well survive the latest crisis triggered by the CAG reports, but the Indian parliament will have to seriously debate the issue of allocation of limited natural resources and how best to allocate them to private and international players – or to the state sector, if that be the consensus — by coming out with a clear-cut and firm policy. Any delay in formulating such a policy will only see the economy sink into its pre-reforms phase of low growth.

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