Author: Arun Jaitley 
Publication: Business Standard
Date: January 11, 2014

The Indian economy today is passing through a difficult phase. There is a sense of anxiety about the state of the economy if not restlessness. The industry wants the things to move. A year ago, we all worried that a policy paralysis was about to set in. These were expressions being used for the first time. Everyone hoped that in the months to come, things are going to improve. There can be no alibi for non-performance on the economic front. Governments that fail to deliver on the economy tend to look for alibis. The government at the Centre gives the alibi that Parliament is not being allowed to run and that important legislations are held up for want of consensus. But they never look inwards as to what the real problem is. Nine out of 10 measures required for the economy do not need legislations. They are executive decisions which are in the administrative domain. Therefore, executive authority is enough to deal with them. I think we have come to a stage where the only silver lining today is that things can't go worse further if at all they have to improve.

People have been talking about the economic measures and the perception about the Bharatiya Janata Party and the National Democratic Alliance (NDA) as to what they propose to do. There is no doubt, as far as the NDA is concerned, as to the destination where the country should be taken. What is of concern is the ability of the government of the day to take decisions. Governments know which direction is to be taken. They know the programmes that need to be followed. We are a country with 400 million people below poverty line. Despite inadequate governance, we had eight to nine per cent growth rates. And if despite poor governance, we did so well, then we can see what would be India's potential with effective governance. There are governments at the states. Some of these states such as Gujarat and Madhya Pradesh have achieved remarkable growth in all these years. Gujarat has been a growth story for long but Madhya Pradesh which had the tag of being a prime BIMARU state has turned around and recorded double-digit growth rates. Some may say that it started with a low base but that doesn't take away the fact that it's a hugely successful turnaround story.

One has to honestly analyse what went wrong in the India story. The first lesson that one learns from the last few years is that India can not afford a non-politician as a prime minister. Prime ministership is not an employment. Prime ministers are not judged by the number of years they spend in office. They are always going to be judged by the direction which they gave as far as the economy is concerned. And if that is to be judged, the PM's word must be the last word in the government. Prime ministers must be the natural leaders of the country, certainly of their own party and the government. They can never look helpless. Prime ministers can not go back with a feeling that I am not being allowed to deliver. If you were ever to come to a situation like this, you will never be able to hold that authority of the government. Therefore, India must now realise that this whole experiment of the political and executive authority residing in separate power centres does not work. A corporate can run on this type of a model where the board of directors sit somewhere, the authority resides there and the hired CEO runs the company and reports to the board. Corporates can run in this manner but you can not have the largest democracy of the world running in this manner.

The second important lesson is that our objective should be to have higher growth rates so that an enriched government has enough money to spend on poverty alleviation programmes for the poor. You cannot merely rely on potential populism in order to pursue your politics.

The third important lesson is about the image of India. Image will not merely depend on jingoistic statements. Image also depends on how we govern. If we have an image of a policy paralysis or an image where you do not inspire confidence even in your state governments, and I think a large part of the energy of the current government in the last few years is really spent on this, then we can not make any good progress. Some states stand up and feel that you cannot really perform if you have an unfair government at the Centre. This is not a government which is fair. Not being content with a drubbing at the polls, the government wants to set up a commission of enquiry against a state. I have no hesitation in saying that if we are looking for political confrontations all the time, then you can not develop a larger consensus for economic growth. It is a lesson for all governments in future that India is a federal polity. There would always be governments in the states belonging to other political formations. You have to accept that verdict of the electorate, and you have to allow them to function and allow them space to function. You have to realise that arrogance in politics is always counterproductive. The people who meet you when you are going up, would also be the same to meet you when you are slipping down. Only posterity can see who has the last laugh. I remember how my suggestions on the Lok Pal Bill were being snubbed on December 29, 2011, and the House got adjourned and just two days after the election results came out, even my floor suggestions on the Bill were being accepted without written amendments. I said to myself that the mighty have fallen. There is no last day in the political calendar. There is a particular methodology of dealing with the political system. In the past, it has been practiced. I remember how cordial relations and bonhomie existed between P V Narasimha Rao and Atal Behari Vajpayee.

The winds of political change are already there. As far as India's economy is concerned, the biggest challenge is how to revive the investment cycle. And I think If we have to revive the investment cycle, India's economic decision-making must become credible. The current government has lost its will to rule. They see the writing on the wall. It's no longer a lame-duck government, the closer analogy would be a dead-duck government. Change, and change for the better is inevitable and it's now a matter of right for all Indians.