Race Course Road

India Today
September 7, 1998

RACE COURSE ROAD
Vajpayee in North Block

PM realises economic recovery is the key to survival

Prabhu Chawla

The majestic Rajpath separates North Block, the headquarters of the Finance Ministry, from South Block where the Prime Minister's Office (PMO) is located. Last week, the question before Atal Bihari Vajpayee was: should he read the nation's economic health bulletin in the next morning's newspapers? Or should he simply cross the road and get actively involved in the process to diagnose and suggest corrective measures to stop the economy from becoming terminally ill?

Since he took office in March, neither Vajpayee nor his aides were ever seriously involved in the macro management of the economy. Often the PMO came to know about a massive sensex crash or the sliding rupee from the newspapers. Not anymore. Though belatedly, Vajpayee has probably realised that it is time he stepped in. So after giving Finance Minister Yashwant Sinha and his team a free hand for five months, Vajpayee made a small yet significant step last week by appointing two panels to advise him on macroeconomic issues and policies. The committee on trade and industry, for example, includes usual suspects like Mukesh Ambani, Ratan Tata, R.P. Goenka and Nusli Wadia as members. Yet it unfolds Vajpayee's strategic plan to deal with the industry leaders directly and attend to their unending woes emanating from serious recessionary trends. Not surprisingly, a majority of the council members head corporate houses that have been badly hit by the recession.

Vajpayee is certainly working to a plan. He is aware that for a speedy economic revival, a long-term policy framework has to be put into operation. With other Asian economies still in a spin, Vajpayee honestly believes India could become the rendezvous for foreign investment. It is this that has goaded him to revive the prime minister's Economic Advisory Council and induct into it economists of all shades from the extreme Left to the total marketwallas for a consensual economic agenda for the Government. It's a different matter that some people responsible for the current mess are members of the council as well.

The move to make the PMO the fulcrum for major economic initiatives is also aimed at dispelling the impression that Vajpayee was hardly interested in economic matters. In fact, Vajpayee is perhaps the only prime minister since Independence whose involvement in the budget-making process of his Government was minimum. It was a powerful quartet comprising Sinha, then finance secretary Montek Singh Ahluwalia, Chief Economic Adviser Shankar Acharya and then revenue secretary N.K. Singh who conceived and delivered the first ever saffron budget. Discussions with the PMO on the final proposals were considered a mere formality. Quite unlike the past, when the PMO provided the basic guidelines and either the principal secretary or secretary (economic affairs) to previous prime ministers was present not only in budget-related meetings, but also in important discussions regarding fiscal and monetary policies. However, Vajpayee's officials were kept out of all such parleys.

Vajpayee now feels the time has come for him to stop collecting brickbats for all the ills that ail the Indian economy. He knows there are bouquets also to be gathered, which he can even if he succeeds partially in the task of putting the nation's economy back on the rails.

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