Made in America

Some have linked Friday’s round of significant economic liberalisation to Thursday’s announcement by the US Federal Reserve Bank that it would make bond purchases of about US$ 40 billion a month till the American unemployment rate began to substantially decline; an open-ended Quantitative Easing (QE-III) of sorts. (It’s reasonably argued that fresh money entering the global market can be channeled to India following our policy announcements.) Perhaps. It begs the question, however, of why our economist-geniuses who advise the prime minister did not push this immediately after QE-II, two years ago, when the US Fed released US$ 600 billion into the market. Perhaps India’s political circumstances were different: the 2G scam had yet to fully blow up in the UPA-2’s face; and the coal-mine allotment scam, for which the principal Opposition has demanded that Manmohan Singh call it a day, was yet to surface. That’s the way it looks but really, what do scams and a government’s plummeting credibility actually have to do with taking bold policy measures? If anything, an adverse political climate paralyses the government, as had been the case with UPA-2 till Friday afternoon. In such an environment, only those with suicidal tendencies become reckless; but the fact is that while an individual might be suicidal, governments are not. So there must be another reason.

Those who would benefit most from FDI in multi-brand retail or civil aviation, etc, (besides us Indians, of course) would be American business. And, by coincidence, US President Barack Obama has been looking around the globe for some help with job creation. It’s no secret that the Americans have been putting pressure on us to allow FDI in retail: the Wall Street Journal routinely says it will create 10 million new jobs, and the Economist led the chorus of lament last December when FDI in retail was suspended under pressure from West Bengal Chief Minister Mamata Banerjee (when US Secretary of State Hilary Clinton called on Mamata four months back, one of the things they spoke about was FDI in retail). And then, most recently and most famously, the Washington Post said all those sad things about Manmohan Singh.

Manmohan Singh, who got along famously with President George Bush (he went to Washington DC for dinner in September 2008 and declared deep love for Bush), may have been hedging his bets; after all, if Barack Obama was going to be a one-term president, then wouldn’t it be better to wait till Mitt Romney took office before Manmohan Singh ingratiated himself with the White House? Lately, however, it’s become clear that Romney’s campaign is not only floundering, but that it shot itself in the foot with a tactless remark when the current round of anti-US violence broke out. Manmohan Singh must have read the writing on the wall and figured, heck, there’s no point waiting any longer.

You may think it cruel to call our prime minister an American lackey, but recall the Indo-US Civil Nuclear Agreement over which he faced a confidence vote in Parliament in July 2008. A section of the Left (which broke with the UPA-1 over the agreement) had even alleged that our prime minister was beholden to America. That is taking things too far; yet the whispering about him has never stopped and even today you will encounter questions about how Manmohan Singh climbed up government after starting his career at the United Nations in the 1960s. It is impossible for a mild-mannered apolitical person to become Chief Economic Advisor, Reserve Bank Governor or the head of the Planning Commission; to get any of these posts you have to be a player. Or you need a Godfather.

But why blame the prime minister alone? He never would have had the courage to push the latest policy measures unless he had the tacit cooperation of the BJP. The presidential elections in July showed, at Mamata’s cost, that no political gambit is going to work if you are alone. Samajwadi Party’s Mulayam Singh Yadav proved then, as he did during the nuclear deal, that he is an opportunist. Other Chief Ministers are still warily testing the waters. Everyone knows nothing will happen to the UPA-2 unless the BJP is on board (or at least, not seen to be opposing them). And it would not be difficult for the prime minister to get the BJP on his side. After all, it was AB Vajpayee’s government which started a strategic discussion with the USA. The BJP has never hidden its affection for the US, despite the Gujarat Chief Minister’s inability to obtain a US visa.

What does this all add up to? Manmohan Singh has done the US a big favour with the latest great wave of economic reforms. He’s also given India’s middle-class a ray of hope in an otherwise dismal economic landscape. And given all the political pygmies and reluctant dynasts that surround him, I wouldn’t be surprised if he emerges out of coal-gate without a smudge and even becomes prime minister for a third time, in 2014.

The writer is the Editor-in-Chief, DNA,  based in Mumbai