16 FEBRUARY 2016
Owning without interfering
Promises are extremely easy to make for a politician. The problem, however, lies in delivering on them. Tougher still is to do so in a time-bound manner. The coming Union budget provides Finance Minister Arun Jaitley that one near-term opportunity to walk the talk, and make good his words. Mr. Jaitley appears to be acutely aware that time is ticking away. He also understands that any dithering on the reform front would drastically impair the chances of a quick economic recovery for the country. Realising the exceptional predicament he finds himself in at the moment, the Finance Minister hinted at a series of banking reforms while addressing a session at Make in India Week in Mumbai on Sunday. The Indian banking system is in crisis at the moment with bank after bank, especially the government-owned ones, reporting hefty losses in the face of mounting bad loans. The Reserve Bank of India’s ordained clean-up notwithstanding, the banking system desperately needs to be pulled permanently away from the legacy elements that have played havoc for long. “The government is committed to zero interference and letting the institutions run professionally,” Mr. Jaitley said in Mumbai. “And the boards of the banks have to be run professionally.” He went on to assert that the government would ensure the banks worked purely on professional considerations. At the same time, he felt that the country had not reached a stage where the government could pull out of the banking system altogether. “If you see the last three-four decades, state-owned banks have played an important role as they reached out to areas where there was no banking,” he said. No doubt, the banking system remains out of bounds for far too many underprivileged sections. However, oftentimes this fact has been conveniently used to perpetuate the government’s hold over the banking system. Reducing its financial stake in state-owned banks can, at best, help fill the coffers of the government. It does not, however, unburden the government of the problem of conflict of interest. History is replete with instances of subtle and not-so-subtle interference by the government in the banking system, resulting in decisions based on partisan, populist or simply expedient considerations.
If the zero-interference assurance given by Mr. Jaitley has to have any meaningful and practical implication, the government would do well to at least reconfigure its financial stake in the banking industry. This could be done by ring-fencing the government’s equity stakes in banks by transferring its shares into an independent, professionally-managed holding company. In an integrated global environment, financial decision-making has become an increasingly complex process involving very many dynamic imponderables. Given that fact, banks will be well-served if they are allowed to carry on their businesses without somebody interfering in their work time and again. The circumstances are currently ideal for Mr. Jaitley to break new ground in the banking field.
Conundrums for the Congress
In West Bengal, Kerala, Tamil Nadu, Assam and Puducherry that will face Assembly elections in 2016, the Bharatiya Janata Party is relatively weak, but the political configuration in these States (and a Union Territory) will not make it any easier for the party’s chief national opposition, the Congress, to take advantage of the situation. The Congress senses that the road to its revival at the Centre passes through these States’ alleyways where regional forces dominate, except in Assam. In Tamil Nadu, the Congress has resurrected its tried-and-tested alliance with the Dravida Munnetra Kazhagam to consolidate votes in the State’s multi-party electoral landscape. Even so, for the Congress it will be a tough task to sell this alliance as a better alternative to the ruling All India Anna Dravida Munnetra Kazhagam, as public memory of the United Progressive Alliance is still relatively fresh. The Congress’s other alternative was to throw its weight behind a third front, but the party has long forsaken any ambition to lead a non-Dravidian alliance. Its weak presence is a consequence of its long-term decline in Tamil Nadu, despite the hold in the popular imagination of “Kamaraj rule”, the party’s halcyon days some 50 years ago. In any case, its claim to the Kamaraj legacy is now under dispute following the revival of the Tamil Maanila Congress. Whether the Congress’s aspiration for short-term gains will materialise depends less upon political arithmetic and more on the public appraisal of the ruling AIADMK. And with the opposition space still being inchoate, the outcome is difficult to forecast.
In Kerala and West Bengal, the Congress is caught in a bind. The wilful adoption of a subsidiary role to Mamata Banerjee’s Trinamool Congress enfeebled the Congress over time, and explains its State leadership’s desperation now to ally with its long-term nemesis, the Communist Party of India (Marxist)-led Left Front. But just as the CPI(M)’s central leadership is divided over the question of an alliance — its West Bengal unit is in favour of a tie-up even as the central leadership remains undecided — the Congress high command faces a Hobson’s choice. An alliance with the Left Front would enable a viable contest against the Trinamool Congress and thus a better harvest of seats in West Bengal — but this may help the BJP gain a foothold in Kerala where the Congress-led front and the opposition CPI(M)-led front are the main contestants, and are at loggerheads. For the Congress leadership, leaving the political choice of alliance-building to its federal units based on local expediency is an easier option. This is unlike the Left Front, which cannot take a political decision without answering ideological questions on a tie-up with the Congress and what this would mean for its chances in Kerala, where it would hope to gain from anti-incumbency against the Congress. In Assam, the Congress’s choices are less stark but its challenges — the burden of anti-incumbency and a communally polarised build-up — are strong. The party has its task cut out.
Hobson’s choice: A Hobson's choice is a free choice in which only one option is actually offered. As a person may refuse to take that option, the choice is therefore really decided between taking the option or not. In other words, one may "take it or leave it."