Masterly inactivity: How a 'do nothing' govt let India down

In an early episode of the BBC comedic series Yes, Prime Minister, Jim Hacker, the hopelessly outwitted prime minister, wonders what he ought to be doing for his term in office to be rated a success. Sir Humphrey Appleby, the Whitehall bureaucrat who weaves circles around the politician, helpfully suggests “masterly inactivity” as a course of action.

“No,” says Hacker, by now wise to Sir Humphrey’s wily ways. “A prime minister must be firm.”

“Indeed,” concurs Sir Humphrey. “How about ‘firm masterly inactivity?’”

Tainted by corruption scandals, each more horrendous than the previous one, and frozen into policy paralysis because of ideological inconsistencies and a dysfunctional power-sharing arrangement at the top, the Manmohan Singh government today finds itself in a hopeless political bind.

More from Politics

Is Shashi Tharoor’s breakup with Congress inevitable? ‘Naxalism will end in India by March 2026’: Amit Shah at CRPF Raising Day parade

Having practised “masterly inactivity” to perfection for two-plus years, having overseen the most egregious mismanagement of the economy, and having been forced on the back foot by a grassroots-level anti-corruption movement that has exposed its moral and political bankruptcy, the government has come out swinging with uncharacteristic firmness with its policy on FDI in retail.

[caption id=“attachment_143245” align=“alignleft” width=“380” caption=“The Prime Minister arrives for the opening of the winter session of the Parliament. AP”]  [/caption]

Faced with collective stone-walling from the entire ranks of the opposition - and even some allies of the ruling Congress - the government has resorted to unyielding bluster to stand its ground on the policy initiative. It perhaps reckons that the urban middle-class constituency, which it had lost to the force of the Anna Hazare-led movement, can be won over with the perception that it - and it alone - stands for reforms and the opening up of the economy.

Yet, in terms of timing, the initiative on FDI in the retail industry is hopelessly off the mark. When the UPA was returned to power in 2009, it had been rid of the albatross that the UPA 1 government had around its neck: the Left parties, which were holding it back from doing anything at all and with whom the government had fallen out over the Indo-US civilian nuclear deal.

The opposition BJP, which had expected to coast to power, was stunned by the 2009 verdict, and was licking its wounds.

Having been returned to power with a stronger base in parliament, the government could have set a forceful agenda for its second term with sweeping economic reforms. Indeed, fund managers with international fund houses were at that time positively rapturous with expectations of what the government could achieve.

In a mood of over-the-top bullishness, Ed Pulling, the managing director for the Pacific Regional Group of JF Asset Management, told me in June 2009 (barely a month after the UPA had been returned to power) that his confidence in India as an investment opportunity was close to its highest at that point. And the opportunity thrown up by political alignments accounted for a large part of his positive outlook on India.

“Put it this way,” he had said at that time. “From a political perspective, this is the best I’ve ever experienced. And I think there is also upside politically. If the Congress executes well over the next three to five years, there is a chance that the next time their position could be even stronger. I haven’t been able to say that for at least 10 years. I’ll be honest: I misread the political outcome. I adhered to the theory that there will be more fragmentation, that provincial parties would increase their influence. So this has been a very surprising outcome for me.”

But as another reputed fund manager told me a year ago,while the stars were aligned in India’s favour, the India story risked being undermined by ’execution risk’ - that is, of the government not doing what it takes and not delivering on the promise engendered by propitious circumstances.

Even the first tentative steps of the UPA 2 government were extremely inept and betrayed its lack of confidence in its own political strengths. Having gotten rid of its Left crutch, and having become less dependent on its allies for survival, the Congress could have set the terms for the power balance within the coalition during the hard bargaining that preceded the appointment of ministers.

Yet, as the Niira Radia tapes reveal, the Congress capitulated wholesale to the political blackmail by,principally, the DMK. And it was that folly that has haunted the government for all of its second term.

Today, with the opposition re-energised, and with crucial elections in key states near at hand, the government, increasingly facing criticism, even from heads of industry, of a policy paralysis that is stifling growth, appears to be overcompensating with ‘firm masterly inactivity’.

It perhaps calculated that the FDI on retail would burnish its reformist credentials and make up for its having done nothing all this while. But it now finds itself wrong-footed by the reflexive pushback by the opposition parties, who perhaps sense that they’re onto a game-changing election winner.

One doesn’t care overmuch for the political liability that the constituent parties of the ruling coalition will bear for their economic folly. But the opportunity cost that India has paid, and will continue to pay, for the masterly inactivity of this do-nothing government is criminal.

It’s enough to induce kolaveri in even the most bullish fund manager who put his money where his mouth is.