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POLICY WATCH

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UPA-2 IN A HURRY “I am aware that we are working against the political calendar…I have no doubt that, in the time that is available to us, each one of you will bring your best efforts to complete the unfinished task before us...” Manmohan Singh at Council of Ministers Meeting (1st Nov’12)

Himanshu Shekhar

The political count-down for the next general elections seems to have begun. At least that is the political message the Prime Minister conveyed in his opening statement (quoted above) at the full council of ministers meeting on 1st November. After a major cabinet reshuffle exercise aimed at refurbishing the falling image of his government, Prime Minister Manmohan Singh was visibly tense at this meeting. Only 18 months are left of UPA-2’s tenure and he knows that the time available to perform and execute important poll promises UPA-2 made in 2009 is limited. And so he categorically sent this message across to all his 77 ministers: “…while we need not be unduly gloomy about our prospects, we certainly need to redouble our resolve to meet the challenges before us”. Finance Minister P Chidambaram was more frank in his assessment of the challenges on the economic front. In his presentation before the council of ministers, he warned that if urgent corrective steps were not taken on the economic front then India faced the danger of slipping into junk grade on creditworthiness. He urged his ministerial colleagues to collectively take steps to control government expenditure, especially subsidies.

LOGISTICS TIMES November 2012

This straight talk followed a broad restructuring of the Manmohan cabinet which saw a few Congress stalwarts shunted out of the government. 17 new faces were inducted and five junior ministers were elevated to higher ranks in the government. The cabinet rejig reflected the growing clout of Rahul Gandhi in the Congress hierarchy. It was an attempt to give a new face to UPA 2 and re-energize the Manmohan government. The Prime Minister wanted to restructure the functioning of his government by roping in new faces who could bring in new ideas. But the reshuffle annoyed a few senior ministers and serious questions were raised about some of the changes effected in key infrastructure ministries. The decision to shuffle out Jaipal Reddy from the Petroleum Ministry created a controversy as it happened in the backdrop of his tiff with the Reliance Group. Corporate Affairs Minister Veerappa Moily was moved to replace him at this high-profile ministry while Sachin Pilot was promoted and shifted to take Moily’s place in the Ministry of Corporate Affairs. Jyotiraditya Scindia was given charge of the Power Ministry after elevating him as Minister of State (Independent Charge). In a surprising development, the Surface Transport and Highways Minister CP Joshi failed to keep charge of the Ministry of Railways as Pawan Bansal was roped in from Ministry of Water Resources and Parliamentary Affairs to hold the reigns at the politically crucial Rail Bhawan. The biggest cabinet reshuffle was followed by a rally at the historic Ramlila Maidan in support of the decision to allow FDI in Multi-Brand Retail. This is the first time the Congress party has gone to the streets in open support

of economic reforms. Ironically, the Gandhi family did not openly support Narasimha Rao’s effort to reform the Indian economy in 1991 when Dr Manmohan Singh was the Finance Minister. But the rally in Ramlila Maidan was an attempt to explain the rationale behind some difficult and bold economic decisions Manmohan government has taken in recent months like allowing FDI in several crucial sectors like retail, civil aviation and broadcasting, revising the price of diesel and putting an annual cap on the subsidized LPG cylinders. It followed the series of big bang reform initiatives aimed at overcoming the growing perception of policy paralysis in the functioning of the government. UPA 2’s big push to kickstart the economy in Sept-Oct finally seems to have had some impact. The official data released by the Ministry of Commerce and Industry on 31st October shows that eight core industries (Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Cement, Steel and Electricity) registered a modest growth rate of 5.1% in September, 2012. This was a jump from 2.3% growth rate registered in August this year and 2.5% in the same month last year. Incidentally this is the highest growth rate in eight core industries in the last seven months. In this period Coal production registered a growth of 21.4% in September 2012. It had grown at a negative growth of -18.2% in September, 2011. Similarly, refinery products, fertilizers and cement have also shown marked improvement this September compared to last year. But the larger challenges remain. Other key infrastructure sectors have not shown much improvement despite

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