What is at stake here is nothing less than the credibility of the Manmohan Singh government. Corruption, a steady drift in policy-making, and a paralysis of governance have raised serious questions about this government's ability to run the country. The Prime Minister gives the impression that he is in office but not in power. So, what is to be done? The answer, I think, lies in some hints that Manmohan Singh gave at what was otherwise a disappointing press conference last week. The government should play from its strength and reassert its authority.
It should begin by taking credit for some of the reforms that it has almost achieved. The best example is the far-reaching Goods and Services Tax, or GST. It is by far the most important tax legislation in India's history as a free nation, which will for the first time make India into one common market, cut huge inefficiencies and corruption, improve revenues of the states and Centre, lower the overall burden of indirect taxation, and eventually lower prices.
Although GST was proposed by the previous NDA regime, this government has worked patiently with the states to make it almost into a reality. The government is now ready with a constitutional amendment which is the next step. However, the states ruled by the Bharatiya Janata Party oppose it. The Prime Minister has to sit down with Opposition members and cut a deal. We know that he is capable of it. He cut a deal when it came to the nuclear pact and helped to transform our relationship with the United States. Once the deal is made the government must go on the offensive and take credit for it.
What I am suggesting is that Manmohan Singh should try and recover the spirit of 1991 and become a reformer again. No longer does he have to contend with the Left parties. Take the case of food inflation. So far, this government has been applying short-term bandages - it tries to catch hoarders, stops forward trading, forbids export of grains when the country has had a bumper rice harvest, and expects a record wheat crop (while ignoring the grain worth Rs 17,000 crore rotting under the tarpaulins of FCI). The key thing is to increase long-term supply. This requires that we recapitalise and reform agriculture both at the production and distribution stage. We have to allow competition against FCI in the warehousing of food, permit foreign investment in modern retail to establish cold chains and reduce crop wastage, and allow farmers to lease their lands to entrepreneurs in order to raise productivity.
Although reforms happen at the level of the states, a strong, reformminded government at the Centre can make a huge difference. Take a third example. The future of our country will be written in the cities, not in the villages. Our cities are crumbling and this government has realised it. It has created a major reform in the management of our cities with the Jawaharlal Nehru National Urban Renewal Mission, or JNNURM. A few cities have responded and utilised the huge amount of funds allocated under the scheme.