Villains Of The Economy
As the economic downturn worsens, the Vajpayee Government comes under fire for holding up key reforms. INDIA TODAY analyses the performance of 10 ministers to find the extent and causes of inefficiency.

The Shadow Of Fear
In a bid to regain the initiative after the Agra Summit, militants have moved to the Jammu region-stretching the security forces and sparking tension.

Crime And Reward
The Chautala Government indulges in a controversial spate of forgiveness, pardoning murder convicts, most of whom are close to ruling party politicians.

New Pot Of Gold
While the US debates the ethics of a cutting-edge medical technique that uses cells from embryos, India can march ahead-if it gets its act together.

COVER STORY: GOVERNMENT

Ministries Of Inaction

Inefficiency, cluelessness, ideological opposition and turf war have brought economic administration to a standstill. Analyses of the 10 key economic ministries show why and how non-performance is holding the economy to ransom.

By Rohit Saran and Malini Goyal

July 31: Government revenues decline by 13 per cent in the first three months of the fiscal year in 2001-2.

August 1: Exports fall by 4.6 per cent in June 2001 compared to June 2000.

August 6: Business confidence index registers sharpest dip in three years.

August 7 and 8: International credit rating agencies Standard & Poor's and Moody's downgrade India's rating.

August 10: Industrial growth in June 2001 plunges to 2.1 per cent.

In the peak monsoon, a gush of gloom is clouding the economic landscape of the country. Across sectors, industries and companies, the economic mood is one of extreme despondency. Indian businessmen, bankers and managers are looking to the Government as their saviour-and villain-much the same way ancient man looked up to the gods for deliverance in troubled times. The overwhelming feeling is that the A.B. Vajpayee administration is living on an overdose of promise and underdose of performance. A normally subtle and circumspect Tarun Das, director-general of the Confederation of Indian Industry (CII), recently blurted out, "The Vajpayee Government has been zero on implementation of policies and projects. The governance is weak. The bureaucracy has lost interest and is demoralised."

This is not just a big lobbyist's angst about the Government's inability to pull industry out of the downslide. The cost of ineptitude is evident and rising. According to a CII estimate, inefficient roads and transport have made it cheaper to import steel from Europe to Mumbai than take it from Jamshedpur to Mumbai. A Power Ministry study shows that Indian industry pays three times more for power than the Chinese industry does. Small-scale firms still have to put up with 40 different inspectors a year and every new project in the power sector still needs at least 18 clearances.

That's a damning account of the National Democratic Alliance Government that has 26 economic ministries and 45 economic ministers. The performance of the largest ever army of economic ministers is inversely proportional to its size. There are too many conflicting interests in the multi-party coalition for it to deliver. There are ministers who are out of their depth in their jobs. There are ministers who are ideologically opposed to reforms committed by the Government. And there are ministers who are unable to perform due to their colleagues' inefficiency. Laments Ravi Kant, executive director of Telco: "There is no incentive for performance in the political system. I would go so far as to say that we actively encourage non-performance."

	"In India, there is a strong consensus for weak reforms." J. Mukherjee, Director, Standard and Poor's
	"I have never seen such a thin pipeline of investment projects." K.V. Kamath, Chairman, ICICI
	"There is no incentive for performance in the political system." Ravi Kant, Executive Director, Telco
	"The Government has been zero on implementing policies and projects." Tarun Das, Director-General, CII

Surely there are things other than the Government's ineptitude afflicting business. Competition is intensifying and the global economic slump is getting severe. But the Government's non-performance has compounded the fallout of such events. A rough calculation shows that the Rs 58,000-crore National Highways Development Project could create employment for one lakh people and generate demand for five lakh tonnes of steel and 110 lakh tonnes of cement. That's the economic benefit of just one ministry's optimal performance. But the project is three years behind schedule and part of it will take off only by end 2001.

It's not that nothing is happening in any ministry. A few ministers have taken some promising initiatives. Recently, Law Minister Arun Jaitley was able to get Parliament's approval for abolishing 300 archaic Central laws. Last week, Power Minister Suresh Prabhu was able to coordinate the signing of contracts for six private power projects without any guarantee of payment.

But such deeds are too few and minor to make a mark in the sea of misdeeds. Diagnoses Kant, "The problem is nobody is looking at the overall economy and decisions are being taken in a piecemeal manner. You wonder who the CEO of the economy is." The root of the non-performance is lack of economic leadership, one with a vision and the authority to force accountability and punish mediocrity. Says Joydeep Mukherjee, director, Standard and Poor's: "In India, there is a strong consensus for weak reforms."

To assess the inefficiency and its cost to the economy, India Today evaluated the performance of 10 economic minis-ters-excluding Finance and Commerce. Conventionally the Finance Ministry, at times the Commerce Ministry, is the one that is painted as the chief villain. The reality is a larger part of government's economic agenda rests with other economic ministries. Some of the most appreciated commitments of this year's budget speech had nothing to do with the Finance Ministry. For instance, the proposal to overhaul labour laws under the Industrial Disputes Act and Contract Labour Act. Or the approval for disinvestments in 27 public sector units (PSUs) during 2001-2.

The 10 ministries evaluated are not the only economic ministries. The purpose wasn't to produce an exhaustive report card of all economic ministries, but to choose key ministries to illustrate the extent of inefficiency in economic management. In addition to ministers' achievements, their approach to work, promptness of response, understanding of the ministry's problems and openness to ideas were also analysed. The performance index was thus constructed, separating non-performers by design from non-performance by circumstances. The analyses show how lack of effective leadership pulls a few good performers down to the level of non-performers.

—With V. Shankar Aiyar

MetroScape

Looking Glass

Delhi Exhibition:
Figures In My Mind

Delhi Night Club-Restaurant: Nyx

Mumbai Lifestyle Store: Yantra

The male model is an unwanted species now. Nothing, not even their opouts, poses and exposes, is helping him turn the corner. An epitaph by INDIA TODAY's Himanshi Dhawan in
Preety Boys No More