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BW Businessworld

Courageous Adviser

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The government is manned by women and men who give their lives to it. They generally come out of the inarticulate classes, so they take naturally to the caution and secrecy that pervade the government. The chief economic adviser is one of the few who are sometimes recruited from outside the civil service. So he has to pick up the unspoken rules and constraints relatively late in life. Since he does not belong to the services, he has no band of mates who might teach him the ropes and rescue him if he stumbles. On the contrary, he is liable to be surrounded by hyenas waiting to eat him up if he makes a mistake.

Kaushik Basu is the first economic adviser to come from outside the government in some years. He has hitherto played with words so well that he seemed to have learnt the ropes. Last week, he did not quite stumble, but did some skillful dancing to stay on the rope. He happened to be in Washington, in the company of his finance minister, who took India's seat at the biannual meeting of the International Monetary Fund and the World Bank and, outside, gave reassuring and disingenuous answers to questions about his last budget. While Pranab Mukerjee denied, unconvincingly, that he had targeted Vodafone's purchase of a telecommunications company, Basu gave a speech of his own at the Carnegie Endowment, which someone in his ministry claimed to be embarrassing. What upset this high and holy functionary must be inferred from the press statement Basu issued after the speech.

The uncomplimentary remarks he made about the European Union, that it could come unstuck when the loans European Central Bank had taken to rescue banks had to be repaid in 2014, were perhaps undiplomatic, but they could not have been the reason for the reprimand. More likely, it was Basu's venture into political analysis that upset his purported superiors. It is Indians' common observation that their politicians make an undeservedly good living out of politics and are not very fond of reforms that would make politics less paying. Basu, who has come from outside as an expert, thinks that politicians favour reforms, but want the credit of doing them for themselves, and prevent their opponents from doing the reforms. Basu thinks it likely that the next general elections will give a majority to the party he is serving, and that it will then release a flood of reforms. One can understand if the Congress is embarrassed by this informal promise, for its reluctance to do any reforms is legendary. That is not, however, what upset the satrap who pulled up Basu; he did not appreciate the demonstration that he was an emperor without clothes. For wherever he goes, he professes his undying devotion to reforms. He keeps telling the world how many reform bills he has introduced in Parliament, and how major reforms were only as far as the next session. He did not like the suggestion that he was going to continue to make meaningless noises for another two years. He was also probably embarrassed by Basu's assertion that many reforms such as foreign direct investment in multibrand retail would happen soon because they did not need the opposition's cooperation; the obvious question as to why they had not then happened already escaped him.

One may think that Basu was upbraided for some error of fact or opinion; but his crime was more serious. He broke the unspoken rule that the government, headed by a reformer of renown, keeps swearing by reforms without doing any. This consistent wearing of a double face is the minimum qualification for serving this government; Basu has been around for so long, but he has not yet got a second face manufactured. That may not embarrass him, but it does his colleagues. He faces a dilemma: he can maintain his honesty and credibility, or he can become a loyal soldier.

The rewards of loyalty are many; but it can only harm his reputation for rectitude. So his friends will continue to hope that he does not succumb to the temptation. There are many politicians in India who do not pretend to be reformers; some, like Akhilesh Yadav, have scored spectacular victories without uttering the R-word. It is far better to be honest than to be a card-carrying reformer, to promise what one is prepared to deliver, and to deliver it if one comes to power. If such politicians are persuaded of the desirability of reforms, they are likely to promote and implement them more better, and earn firmer and more durable acceptance for them. What reforms need is effective advocacy, not just sophisticated reasoning.

(This story was published in Businessworld Issue Dated 07-05-2012)