JR: I don’t agree. Surveys done
by psephologists show the ‘market’ has never been an election issue.
And look at the numbers: If the most tragic event of May 21, 1991 had
not happened – we all wish it hadn’t – the Congress would have got about
190 seats. Five years on, we lost 50 seats, of which 39 entirely because
of our had political judgement in Tamil Nadu, another 10 because of
the Congress split and 15 more because of rebels in Maharasthra. How
can you blame reforms?

But isn’t the Congress less sure about reforms
today. What are the lessons from the reforms decade?

JR: There are areas of concern,
but the macro effects have been very positive. India’s external debt
position has strengthened, we now have the so-called ‘dirty-float’ exchange
rate, our foreign exchange situation is good, and we have been able
to avoid an East Asia – type meltdown. The ‘Hindu’ rate of growth has
been redefined to 6.5 per cent.

But, food price inflation has been higher in the ’90s than in the ’80s,
thanks to the indiscriminate use of procurement price instrument: Foodgrain
prices rose at 10 percent/year in the ’90s compared to 6 per cent in
the ’80s. That is why the poverty ratio has not fallen at the rate we
would have liked it to. Broad-based agricultural growth, too, has been
lower.

So economic reforms
have been bad for agriculture and the poor.

JR: No. The reason for this is not
economic reforms, but lack of any fundamental change in the fiscal structure.
For me reforms do not mean marketisation or privatisation: In fact,
I’ve never ever used the term ‘market’ in connection with reforms. Reforms
mean targeting government, which hasn’t happened. In agriculture, the
rate of growth of subsidies has been three times the rate of growth
of investment..

So If you are in favour of increased investment
by the state, then you should be opposing PSU disinvestment.

JR: We are opposed to arbitrary
disinvestment, especially to meet the fiscal deficit. But, it is true
that as long as the fiscal situation is bad no finance minister can
avoid this temptation. I broadly agree that the criterion for disinvestment
should not be profit/loss making. However, the navratnas, which later
became dashavatar, – IOC, BPCL, HPCL, ONGC, GAIL, MTNL, VSNL, BHEL,
NTPC and SAIL – should be left alone. The disinvestment commission had
looked at 58 PSUs and recommended that 34-35 companies be sold, which
the government should have followed.

Again, it is not a ‘private vs public’ issue. I think the government
is good at starting things and the private sector is good at running
them. Take the power sector: Government has the investment capacity
to start projects, but distribution and generation – the actual running
– should be left to private companies. PSUs should be redefined as project
developers. What is needed is private investment and private implementation.
?

But in such a bad fiscal situation, where
is the money going to come from?

JS: We have the money. The trouble
is that it is being wasted on pampering government servants and repaying
loans: Almost 50 per cent of the Centre’s expenditure is on salaries,
pensions, interest payments and debt servicing. Government jobs must
be reduced.

But isn’t the attack here only on lower-level
employees? What about secretaries?

JS: Ninety-five per cent of salaries
go to class III and IV employees, so reducing a few top level posts
will not help. The Fifth Pay Commission was a total disaster, against
which no political party raised its voice. All of us took leave of our
scenes and now we are paying the price. Mr Yashwant Sinha compounded
the disaster by showering a bonanza on pensioners.

You want jobs to
go and also want subsidies reduced. Isn’t that a bit drastic?

JR: We cannot sustain the current
15 per cent subsidy bill. What is the rationale behind subsidising higher
education? Food subsidies should only go to agricultural labourers and
workers in the unorganised sector. There should be no general subsidy
on power, petrol and kerosene. The poor should get kerosene against
their ration cards.

Again, Centre’s subsidy support to states should be according to the
percentage of poor they have. Unfortunately, inefficient offtake in
the past has meant that UP with 18 per cent of the country’s poor gets
only 8 per cent of the total subsidy support, whereas the southern states
get much more than they proportionately should. We must spend more on
education, health, irrigation and infrastructure and not on subsidies
to those who do not deserve it.

Some would say that the real failure of the reforms-era
has been low growth in employment. The strategy has shifted from producer’s
goods industries to consumer goods industries, and that has had a bad
effect on the nature of demand and employment.

JR: As far as the shift towards
consumer goods is concerned, that is correct and it is a positive development.
Such industries create more jobs, as they have in China. In any case,
the employment figures available at present are completely bogus. I
would wait for more reliable figures before I make any definitive comment.

But what about other indicators, such as increased
income disparity in the rural areas and lower rural demand for consumer
manufactures?

JR: That is incorrect. The same
NSS thin sample data which show a stagnation of rural proverty figures
in the 1990s do not show any increase in rural inequalities. A recent
NCAER study shows that there has been an increase in rural consumption
of consumer goods and durables, such as detergents, watches, cycles,
etc.

Studies have shown that even when poverty fell at a rapid pace in the
’70s and ’80s, it was because of high growth and not anti-poverty programmes.
The most pro-poor policies are those which encourage growth and tackle
inflation – especially rising food prices.

Is this the Congress
party’s official position?