Bimal Jalan, governor of the Reserve Bank of India (RBI) from 1997 to 2003 and now member of the Rajya Sabha, is out with his eighth book, India’s Politics: A View from the Backbench.The book echoes his disenchantment with the politics of the day and suggests a 10-point programme for radical political, judicial and administrative reforms without which, he argues, growth with equality cannot be achieved. Jalan spoke on these issues and the economy in an interview with Mint. Edited excerpts:
Do you find the current growth sustainable or do you see a slowdown ahead in the economy?
I think the current growth is definitely sustainable, for very fundamental reasons. Growth raises your revenues, and makes it possible for you to act. There cannot be sustained poverty alleviation without growth. You don’t need 9% growth. I’m fine with 8% growth, as long as it generates employment and education opportunities by itself. We just need to put up the essential infrastructure such as electricity, health, low-cost housing, etc. Before that, we need political and administrative reforms. Forget China, India should reach its own maximum potential, which too is unlimited. Growth is good, but it can’t give us what we need in the short term. A slowdown is not important.
You suggest replacing the Planning Commission with a federal commission. But only the poor states now need the commission.
Since coalitions have emerged as a regular form of government, we need to take steps to be more stable. You can work out a formula for federal commission. Just as the Finance Commission (which decides the sharing of revenues between the Centre and the states) has a formula based on population, etc., the poverty factor can be built into the new formula. The poorer the state, the higher the cost.
You complain that legislations are passed by voice vote, but what is the option when 10% of the government effectively holds back crucial reforms such as pensions?
Democracy is a messy business. It is the rules that are much more important.
If you are dependent upon some people for votes, you can’t push through certain legislations because you are accountable to people, and if people don’t like it, there could be fresh elections. In politics, expression of different views is fine. What is not fine is that I join government and enjoy all the advantages, but I then go on my own path and not follow the collective responsibility principle.
But the Left is on the outside…
If I join the government, then I cannot sing a different tune. The anti-defection law should also apply to these parties, as I’m glad the administrative commission has also now recommended. If the Left has to oppose the government, they must remain outside the government, and not enjoy the perks and power of office. In India, politicians have tremendous power and pomp. The moment we’re elected, we jump from being an ordinary person to a raja. When the opposite happens, the feeling of deprivation is so great that we do anything to retain it.
You have made a distinction between the political and economic roles of the government. What does this imply?
You can decide policy, say whether you want to have a targeting of inflation or not, or whether to pursue growth, but once you’ve decided that an inflation beyond 6% is not tenable, then you are accountable to Parliament on this, but you should allow the institutions, in this case RBI, to do as it deems fit. Once the guidelines have been framed and approved by Parliament, in the case of regulating agencies in insurance or telecom for instance, they should be kept at an arm’s length and allowed to do their job and present a report card at the end. You don’t really need that many ministers or ministries for day-to-day policy matters. We are the largest government in the world.
So, for ministers, you advocate individual responsibility?
In terms of target achievement and performance in an area of public interest, yes. If you have fixed a target, for 2009 or whatever, say for fiscal deficit, after all consultations, then you must be responsible and accountable for that target. Then you can’t come out and say oh, we didn’t have the money, and so on. Or take welfare schemes. Why don’t we leave the performance and delivery of these schemes to the states, or even the design of the schemes to the states? Supposing a budget decides to spend Rs40,000 crore on say NREGS (National Rural Employment Guarantee Scheme), you allocate this on-account to states. Beyond that you don’t interfere as to how it is implemented. There cannot be universal and uniform schemes for such a vast country. The conditions are very different in every state. Let the state decide if it wants to charge minimum wages, how many people in a family, what kind of work, etc. The more important issue is accountability. If it is a central scheme, then the Centre must take responsibility—can’t put the blame on the states later.
What is the best memory of your tenure as MP, and your worst?
The best thing is the extremely rich discussions on nuclear deal, unemployment, and employment schemes. The other plus point is that everybody’s equal in Parliament. It’s a great leveller and it really is a microcosm of India. You are never conscious of hierarchies—even ministers are shouted down. The most painful part was last year, the period of 18-22 March that ended with the passage of the Budget without discussion. This passing of legislations through voice votes continue. Parliament now does what the executive decides.
Is your nominated status as an MP a constraint?
We are privileged to be there. The only problem is that the division of time for discussion is party-based, not giving all a chance. But these are minor issues.
Would you like to be a full-fledged member?
I’m not a political person at all. I’m just a professional, believing in freedom, democracy, secularism. In administration, I’ve been a front-bencher, working with all political parties and eight finance ministers, mostly fighting crises of all kinds. At this stage of my life, I don’t want to enter politics.