'The Economy Is Just A Sideshow'

He's not taking another shot at the Lok Sabha because of an angioplastybut he's campaigning. Dr Manmohan Singh, leader of the opposition in Parliament,hero of economic liberalisation and Congress' cleanest leader, looking a bitunder the fabled north Indian weather, speaks on Congress' economic vision, theIndian people and India Shining.

Do you think the economy and growth have become the main poll planks?

The BJP is only harping on its statistical agenda. The economy is just asideshow. The amount of hatred they are pouring on Mrs Gandhi and her family ishorrible. If it was so secure of its achievements, why is it raking up issueslike foreign origin and Bofors? Advani himself has punctured the balloon bysaying that this prosperity has not touched the farmers who are 60 per cent ofthe population. Look at what happened in the PM's constituency (the saristampede).

Is the average voter more interested in economic achievements now?

I wish it was true. The BJP doesn't appear to have a campaign focussedon development. The ordinary people have always been primarily concerned abouteconomic problems. They are not bothered about politics. The middle class hasthis luxury of not having to worry about immediate economic concerns. Whenthings do well, they feel they are responsible for it. But when things go wrong,they blame the system.

You mean the middle class believes India is shining for them?

Well, there are certain positive points about the economy -- IT, telecom. Areaswhere we have comparative advantage of high-quality, low-cost human capital.Outsourcing and ITES enable us to use those advantages.

Do you believe in India Shining?

Shining yes, but in what? If you say India is now growing faster than fiveyears ago, no, it's not. The rates of growth of output, national income,exports, agriculture, industry in the last 5-6 years are much lower than whatthey were in our rule. It's nothing that'll set the Ganga on fire. But thatdoesn't mean the country is not progressing. It's making progress because of thefoundations we laid. In balance of payments, market-induced exchange rate,direct taxation, portfolio tax, even in the maturing of the capital market, yousee the steps we had taken.

Irrespective of who's responsible for them, what do you think are theeconomy's greatest strengths now?

First and foremost, the BoP and external debt. But the fiscal situation isfar from comfortable. In infrastructure, things are happening in telecom androads. But the growth of power production in the past few years has been only3-3.5 per cent. Even the April-February Index of Industrial Production is onlyone point higher than last year. Last year growth was 6 per cent but agriculturegrowth in the past 5-6 years has been half of what it used to be in our time.The terms of trade for the farmers have deteriorated. There's no publicinvestment, no reform in agriculture. The Sharad Pawar committee on drought anddisaster management is lying for one year because there's a fight between himand the government. Credit for farmers is at 15-16 per cent while loans to buy arefrigerator charge 7-8 per cent. There's a perversity in the system. The bankshave to be directed to lend to the farmers. We have to have a minimum emphasison social capital development even if using the banks as instrument.

The highway project, you'll agree, is a big stimulant. Why couldn't theCongress come up with something like this?

That is true. But the sorry state of the economy we inherited didn'tallow us to even think of such things. This government inherited awell-functioning economy, sound in food, forex and prices. But apart from theroads, the other physical infrastructure like railways and airports are in shambles.

The Congress' disinvestment policy still seems to be caught in atime-warp.

If PSUs are doing well and making reasonable profits under competitive market conditions, not monopoly condition or loss-making, then we don't see the need for privatisation. They are of course independent to go to the market to raise capital as long as they retain their public ownership.

That rules out Indian Airlines' privatisation.

If IA assures us that it can flourish in competition, we have no problem inkeeping it public sector. There must be greater accountability of course, andtransparency. Just because some minister can misuse the power they have overPSUs doesn't mean we throw out the baby with the bathwater. The public sector stillhas a role to play.

Your investment policy is almost a free for all. That's a dramatic change.

We'll set aside only defence and environment related sectors, and where thereis a fear of monopoly. The rest is open to all to invest. Through the RBI ormarket. No limits whatsoever. We don't have a control fetish. We are theoriginal reformers. But at that time, everybody was opposing it. We were alsofeeling our way around.

When did Congress decide to reclaim reform ownership?

We have been consistent on our stand on reforms. Take our economic inspectiongroup or Banagalore policy resolution. Only the direction and speed were inquestion, in an effort to include the deprived section. There was never anyquestion of going back on reforms.

How would you solve the unemployment problem?

First, the economy has to grow fast enough. But we'd also look at labour-intensivegrowth -- export units, textile units after the MFA phaseout. We will have anational employment guarantee scheme for small sector and destitutes. We'll alsoset up a national commission to look into the credit and supply problems of theinformal sector.

Do you think India can sidestep the investment issue and reach ahigh-growth stage through services alone?

We can't neglect manufacturing. Our manufacturing is 17-18 per cent of the GDPcompared to 35-40 per cent in South East Asia and China. How else do we giveemployment to our huge blue-collar workers? We have a 470 million workforce. BPOscan generate at best 4 million jobs.

Are we're ready for full convertibility? How else do you stop the rupee'sclimb?

That has to be gradual. We've to be cautious. We can carry on that roadonly when our fiscal system is sound. The banks are in good shape but if intrestrates start climbing, they may get into trouble. There are other ways ofcontrolling the rupee -- to create a demand for it, by liberalising imports.

Your party's chances of forming the next government seem remote.

I don't think so. We are still one month from elections. Even in urban Indiawhere the shine is visible, there has been a progressive dilution of thefeel-good. The SC verdict, the Lucknow accident -- these are showing the real faceof the BJP.

Will you ally with the Left parties who're rigid on privatisation andlabour?

They had a common minimum programme with the UF. As for labour law reform,I'm sure if the employment situation was buoyant, the labour wouldn't mind alittle flexibility. Anyway, we'll cross the bridge when we get there.

(This is the full text of the interview, extracts from which appeared inthe print edition).