How Pranab-da floored US corporates

Washington: When it’s storming outside, it takes a brave heart to walk into the eye of the tornado and mount a salvage operation.

Finance Minister Pranab Mukherjee did just that this week and with old-time political flair. Diving right into the well of critics at one of Washington’s premier think tanks, he faced his buttoned down audience of business and policy wonks with aplomb. He barely wanted to leave, he was having so much fun showing his “total recall” mind. The suits were first stunned, then impressed as India’s most seasoned politician let loose a barrage of facts, dates, figures, connections, amendments and laws, citing precisely from memory. Surely, a bravura performance laced with conviction in front of a skeptical audience.

The subject: India’s economic reforms. Stalled, is the first reaction of the corporate world.

[caption id=“attachment_284855” align=“alignleft” width=“380” caption=“Diving right into the well of critics at one of Washington’s premier think tanks, he faced his buttoned down audience of business and policy wonks with aplomb. Reuters”] [/caption]

You may ask how can anyone seriously defend the current state of affairs in India, which is variously described as paralysis, governance deficit, regression…. the list of negatives is long. In other words, India Shining is having a dark moment. Even the prime minister’s economic advisors and friends can’t keep quiet anymore. The scuttlebutt is that 10 Janpath doesn’t want any big moving and shaking until 2014 so big- ticket economic reforms will just have to wait. It is another question whether the Congress party would win on this disappearing record. Important advisors have begun to feel that UPA must undertake reforms, justify them, face a vote of confidence and go down fighting instead of crawling to the finishing line.

Foreign investors, US corporates and the US government are all worried. The whispers have got louder and letters of complaint stronger as disappointment grows with the “India story.” The 2013 budget and the retroactive tax provision on international mergers that involve Indian assets have made them jittery. Six financial industry associations wrote to US Treasury Secretary Timothy Geithner, asking him to raise the issue of retroactive tax with Mukherjee in Washington. Take it back or face the music in international arbitration was their message.

Then came a letter by Harold McGraw, head of the US India Business Council and CEO of McGraw-Hill companies, to the White House essentially laying bare the terrible secrets of Delhi. He dissected the Indian body politic, making Mukherjee’s task in Washington even more complicated. McGraw really laid into the Indian government, describing how Indian bureaucrats were running the show because the politicians were too busy fighting scandals. His analysis came down to this: anti-reform bureaucrats are sneaking in policies (such as compulsory licenses for cheap drugs), which are harmful to American business. He said there was a “vacuum” of leadership in Delhi.

Ouch.

Against this background of raging fires, it was Pranab Mukherjee’s thankless task to defend the government - yet again - and establish trust with the business community. It is difficult to say whether he succeeded but he surely gave it his all. Getting more animated as time went by, the soldier and commander of a hundred political battles, was in full metal jacket by the end of the trip.

On retroactive taxes, he said no case older than six years would be opened and settled cases would stay settled. While stressing he had an open mind and was ready “to listen and adjust” a particular policy, he must first be “convinced” of the need. Facts on finger-tips, he pushed back hard, citing chapter and verse on constitutionalism, parliamentary prerogatives and the resilience of the Indian economy.

No, you can’t run rings around the gentleman from Bengal who seems to carry the world (of UPA) upon his shoulders. He can be acerbic, dismissive and charming all in an hour, flashing anger from behind the glasses or smiling.

When this columnist dared to ask about the alleged “vacuum,” the minister was visibly irritated. He bluntly said “No, there is no vacuum.” And for good measure went on to praise the prime minister with fulsome words. “We have a very strong, powerful and acceptable prime minister in Manmohan Singh.” Most Indians won’t buy the line if they read newspapers or watch television but listening to Pranab da, some may believe it.