MMS or MSD? Why UPA-2 is performing like Dhoni's team

In many ways, the economic performance of UPA-2 is similar to that of the Indian cricket team in England and Australia. A start-studded team with some of the best names in the business has been beaten black and blue, with two successive and humiliating whitewashes. If our cricket team had players like Sachin Tendulkar, Rahul Dravid and VVS Laxman, the UPA team is stuffed with economists and politicians of the repute of Manmohan Singh, Pranab Mukherjee, and P Chidambaram, not to speak of C Rangarajan at the PM’s Economic Advisory Council, Montek Singh Ahluwalia at the Planning Commission and Kaushik Basu at the finance ministry. The question is: why does an economics Dream Team like this fall flat on its face when confronted with the challenges they all understand only too well and which they have handled many times before? The answer is the same as the one that explains our cricket rout: a complete lack of application, a defeatist mental attitude once we faced initial reverses, and a team that does not play like one. Each one is doing his own thing. In cricket, we didn’t lack for big names (Sachin, Dravid) or experience. We didn’t lack knowledge of our challengers, too, with the likes of Ponting and Clarke being known quantities. Laxman was even touted as a man who relished playing in Australia. But we still lost. And each one was on his own trip. MS Dhoni didn’t have a clue on leadership. He and his deputy, Virender Sehwag, were said to be having ego clashes. Sachin was chasing his elusive 100th 100. Dravid and Laxman were living on past glory. And the team’s one man in form – Rohit Sharma – never got to play. [caption id=“attachment_197855” align=“alignleft” width=“380” caption=“What was needed was focused policy action in steady doses. But seeing how fast the economy recovered after the Lehman knock, the government looked at growth as its birthright – just like our cricket team did. PTI”] [/caption] How did a team that was No 1 in Tests till the other day, and which had just won a World Cup, lose it all in a few weeks? Clearly, the team thought everything would somehow fall into place. They forgot that winning on home ground was the easy part; the real tests were ahead. Once they got to Australia, they only needed one setback and they crumbled like a pack of cards. Ditto for the Manmohan team – the best one assembled by any recent government. The PM has himself faced the economic crisis of 1991 – which was worse than the current one (so far, anyway). Rangarajan was Reserve Bank Governor from 1992-07, and had weathered not only the main storm of 1991, when the country faced external bankruptcy, but also its after-effects, when interest rates had to be pushed up due to fiscal overspending (almost the exact situation now). Montek was part of Manmohan’s team then, and is so now. Pranab Mukherjee has been finance minister before and is one of the most experienced hands in the UPA – so nobody could say UPA-2 did not understand political economy.  But the Dream Team has collectively delivered a nightmare of high inflation, bloating budget deficits, a decimated rupee, falling tax revenues, and a slowing economy. How did this happen? The parallels with the cricket team are apt. In UPA-1, which was far tougher to manage with the Left constantly carping about policy, the government always appeared likely to stumble, but never did. The threat of the Left kept the team together and focused. In UPA-2, Manmohan Singh thought the field was clear for him to star. But with Congress hubris taking centre-stage, the Dream Team assumed that they will excel and deliver even without a gameplan. Their coach (Sonia Gandhi) was a no-show as far as governance is concerned, and the PM-in-waiting (Rahul Gandhi) had nothing to say on the economy. He merely wanted to be seen as someone with a heart of gold when what was required was a good head for understanding the state the economy was in. Once the 2G and CWG scams – and the Anna cyclone — hit UPA-2 in the solar plexus, the Dream Team simply unravelled. The PM, like Nero fiddled while Rome burned. His two key ministers – Pranab Mukherjee and P Chidambaram – were happy to see him stumble, and were widely seen to be positioning themselves as replacements. Both failed to do their jobs: the finance ministry, blinded by last year’s huge revenue bonanza from the spectrum auctions and the economy’s post-Lehman rebound, didn’t think he needed to do anything more to fix the economy. The home minister, after announcing grand plans to combat Naxalism, failed to get any plan off the ground. Continues on the next page The truth is UPA-1’s run of high economic growth was a fluke – something that was not achieved due to UPA policies, but the big growth in world liquidity in the Bush years and the small reforms pushed through by the UF and NDA governments. But this situation had completely reversed under UPA-2. Only hard policy action and reforms would have ensured a continuation of the dream run. Like our cricketers, who thought Australia would be a cakewalk after humbling the West Indies in India, UPA-2 thought after getting rid of the Left, they would have a field day. What was needed was focused policy action in steady doses. But seeing how fast the economy recovered after the Lehman knock, the government looked at growth as its birthright – just like our cricket team did. A novice investor who happened to put money in stocks just when the markets were about to take off can be forgiven for thinking he was a brilliant strategist. [caption id=“attachment_197859” align=“alignright” width=“380” caption=“After his Australian failure, Dhoni could well lose his captaincy in Test cricket. After his failure in UPA-2, the PM may not pay the same price as Dhoni, but it is clear he is not captain in every sense of the term. Getty Images”] [/caption] But UPA-2 confused the good luck of UPA-1 as being the result of its own economic genius. As a result, when the going got tough, they assumed everything would work out fine without any effort on their part. After his Australian failure, Mahendra Singh Dhoni could well lose his captaincy in Test cricket. This means, Dhoni will only captain India in ODIs and T20. After his failure in UPA-2, Manmohan Singh may not pay the same price as Dhoni, but it is clear he is not captain in every sense of the term. He has been given a prop – a Principal Secretary with direct access to Sonia Gandhi - to do his job. A Dream Team of politicians and former bureaucrats has not delivered. Will the addition of one more bureaucrat, Pulok Chatterji, make a difference? Can a Principal Secretary achieve what a PM could not? Granted, Chatterji has the backing of Sonia Gandhi. But then, so did Manmohan. The Indian Express reports that Chatterji’s big role as economic czar has “ruffled feathers” in the PMO, where his elevation has drawn envy. His two immediate peers in the PMO - the PM’s advisor TKA Nair and the National Security Adviser Shivshankar Menon - enjoy minister of state status. According to the Express, the PM’s efforts to give Chatterji the same status have been stymied so far by the cabinet secretariat. It has “held up the file arguing that it would be difficult to place Chatterji in the warrant of precedence.” The key to UPA’s performance lies in whether UPA-2 can take those hard decisions on cutting subsidies, ending the policy paralysis, and implementing labour and agricultural reforms. Those need political heft, not bureaucratic expertise.