Following is the full transcript of Rajdeep Sardesai's interview with Arun Shourie:
Rajdeep Sardesai: Joining me now is someone who was the face of BJP's reformist impulses and that of the NDA government under Atal Bihari Vajpayee. He was a minister then and a BJP leader, Arun Shourie, appreciate you're joining us here. At a time when most people have come out in the opposition strongly against the Prime Minister and his explanation for a diesel price hike and FDI in retail, you've been very supportive. Am I to understand that Arun Shourie believes that what Manmohan Singh is doing is good for the country?
Arun Shourie: As far as the hike in diesel prices is concerned, I'm personally for it. I believe that all petroleum prices should be at their scarcity value because otherwise we are subsidizing our import dependence. In a country where 75 pc of oil is being imported, there is no need to go on subsidizing that, we are worsening the situation for tomorrow in that case.
Second is that the deficits have become unmanageable. They've become unmanageable because of this government. It disobeyed the deception of the fiscal responsibility legislation and the Prime Minister presided over these deficit budgets. Now the fact is that today with a deficit of about 8.2 pc to 9 pc of the GDP, it is not sustainable. And you look at the budget figure, in the budget it is provided that petroleum subsidies will be Rs 43,580 crore. They're running at a level of Rs 1,70,000 crore. How can we manage this? So, I'm all for an increases in petroleum prices and it is only when they are increased, and this is the third reason, that then alternate sources of energy like solar power, wind power from biogas, from urban gas, these will become viable. So, on that point, I'm with the Prime Minister, on the others like FDI in aviation, that will only help a little in consolidation, FDI in retail is neither here nor there, these international companies are not going to come, even if they do, our small shops are going to beat them, they've beaten these big companies that came into retail. So, on the first point, I'm with the Prime Minister, and I didn't say, as was quoted, that the Prime Minister has shown his strength. I said that the Prime Minister's Office has unlimited strength in India and for the first time on economic status, the Prime Minister has taken one step.
Rajdeep Sardesai: So, let me look at the exact quote Sir, because the interpretation that is being given is that Arun Shourie has come out in support of Dr Manmohan Singh. You've said, 'Prime Minister Dr Manmohan Singh has for the first time shown his strength'. I asked this because a former colleague of Yours Mr Yashwant Sinha, the then Finance Minister, has said that the Prime Minister must apologise for bringing India into a 1991-like situation. Obviously you and Yashwant Sinha then have serious differences.
Arun Shourie: Not in the slightest. He's a person I enormously respect, he's my very good friend. There's no difference. I did not say that the Prime Minister has shown strength. This is the real problem today Rajdeep, you say something in a whole lecture, nobody sees it, If you're going out, somebody asks for a little bit and that is completely turned around. I said, that I just now told you that the office of the Prime Minister has unlimited strength and I illustrated that by saying that Atal ji would just have to nod and those things would get done, he would just raise his eyebrows and those things would not get done. So also the Prime Minister of today has unlimited powers, he has chosen not to exercise them for eight years. That is what Yashwant Sinha has been emphasizing on that if the current situation is due to the mismanagement of the government and the Prime Minister has presided over a corrupt government and a government which mismanaged the economy, so he shares the responsibility. Now whether somebody apoligises or not is really just a way of pinpointing his responsibility.
Rajdeep Sardesai: But what you're saying on the other hand is that the steps that have been undertaken are necessary, that it is a bitter pill, but it must be swollen. To that extent, the BJP perhaps, needs to realise that that the country is going through an economic crisis and perhaps, to appreciate that the Prime Minister has finally chosen to bite the bullet.
Arun Shourie: Please do not ask me or make me say anything about the BJP. I will say I agree with you, I agree with the Prime Minister that the economic situation is dire, it's his responsibility or not is a separate matter. After all the Industrial Production index is going down from 12 pc growth to now 2 pc growth, deficits are increasing, our foreign exchange reserves which were 10 moths inputs imports falling to six months imports, a current account deficit running at 10 pc of the GDP, these are unsustainable figures, Therefore,
Rajdeep Sardesai: But would you blame the government for this or would you say the global situation is such that the government is suffering.
Arun Shourie: Rajdeep you will well remember when we were saying take urgent steps, the government was saying 'no, no, no, we are decoupled from the world economy'. Now we're saying that it is because of the problems in Greece that we're in trouble. So, forget this past. My plea to everybody is the situation today is in front of us. The Prime Minister has himself spelt out the situation in his address to the country, and therefore, focus on the merits of each individual step. The two of these steps were instance, I think nothing of them, one I think is a very good step. So please focus on the steps that will be taken from day to day and urge the government aso, please do not delay matters now. You have a very very narrow window, not even of opportunity, but of necessity.
Secondly, do not wait for legislation, it is not going to happen, it is not going to come about.
Rajdeep Sardesai: That's an important point, because what you're saying is that because of the Parliament gridlock, legislation is not going to happen, so go ahead with FDI in insurance, FDI in pension through executive orders or through power sector reforms which are now being talked about?
Arun Shourie: Some things in power sector you can do because of prior legislation which the government has not implemented. But there are many things that can be done without any legislation. I'll give you one instance, the most alarming decline has been in the index of industrial production. Let's take defence production. In India, because of the monopoly that we've given to the DRDO, we've fallen behind in many respects in our defence preparedness. But outside the government sector, great capability has been built, technical and engineering capability. Every Defence Minister from Mr George Fernandes's time has announced that he will rope in the skills of the private sector. Here is a boost you can give to manufacturing here and now, you do not require any legislation. Similarly, we are today one of the biggest importers of defence equipment. So, like other countries like South Africa, we have set up an offset regime that some per cent of the purchases we make from you, you have to source from India, and it used to be in high technology items. Now if a company even takes a chair for its office work, we say it's offset. So make offset real, don't make it a farce. These are things that will boost Indian manufacturing.
Rajdeep Sardesai: The big worry is the ballooning fiscal deficit. Now you've said that you support the diesel price hike, but many believe that what may be good economics, doesn't make good politics. If diesel and LPG prices are increased, if tomorrow through power reforms people have to pay more power, these are issues that concern the politicians. The politicians are worried that good economics doesn't make good politics. How do you respond to that that reformist Prime Ministers don't get elected, reformist agenda is not an agenda.
Arun Shourie: Well, then so much worse for the country Rajdeep. for example, are the deficits of the state electricity board sustainable and that has completely dried up for a fresh investment in the private sector and therefore intensifying power politics for tomorrow?
Rajdeep Sardesai: But politicians, whether they are from the Congress or the BJP, want free power that makes them electable.
Arun Shourie: That question you should ask them. On the question of the economics of the matter, I feel that postponing good economics is a disaster for the country and a disaster for the politicians who acquire the country by ignoring economics.
Rajdeep Sardesai: Is that a paradox for democracy that good economics doesn't make good politics? How do you get elected next time?
Arun Shourie: Democracy is no substitute for soundness of common sense. Just see the record, we shout and scream at a particular time when a reform is made and forget it after that. I will give you an example, can you often tell me that in 2011, by what percentage points was the power rate in different states increased? You've forgotten, it is up to 28 pc. Do you in July, in Kerala power rates were increased by how much? By 30 pc. You can say this is going to ultimately dislodge all the governments, but the fact of the matter is that in India I've found that when you do something, people shout and scream and then like a sea absorbing a great rock thrown into it, Indians absorb it and get ahead. Today, I feel that a very good example is Narendra Modi in Gujarat. He has increased power rates. He charges power from every farmer. But he delivers power and nobody minds paying.
Rajdeep Sardesai: So you don't see these protests on LPG reflecting a growing public anger, double digit inflation, the housewife is affected. Mamata Banerjee says what about the kitchens of the housewives?
Arun Shourie: Well, they're all phrases. What about the kitchens of the housewives when there'll be no power and no coal because of the protests on coal, no atomic power because of the protests on atomic power, no hydro power because the activists are saying that the Himalayas are being destabilized, then where will the kitchens cook food? These are all phrases. Why not contrast what Gujarat has achieved? Why are we shying away from that. They are charging for power and they are delivering power. Everybody pays for medical services, education cess has been increased, but services are being delivered.
Rajdeep Sardesai: So you're saying that the Indian voter today will be ready for a hike in prices of diesel or power provided the services are essentially delivered to him/her?
Arun Shourie: That is my presumption. But I'm no expert on what the Indian voter will do. I don't know the Indian people and I don't know whether many of these politicians know the people. They're always as surprised by their victory as they are by their loss.
Rajdeep Sardesai: But doesn't it worry you? For example, Manmohan Singh in 2001-02 was opposing FDI in retail when he was leading the Opposition in the Rajya Sabha, today he is a voter of it. Yashwant Sinha and the BJP, supported the FDI in their vision document when they were in the government, now they oppose it. Doesn't that worry you about democracy in India that when you're in the Opposition you oppose the same reforms that you supported when you were in the government?
Arun Shourie: Absolutely, and you're as if you're quoting some of my books and articles. I've said that this adversarial politics has been taken to an absurd level in India. Whatever you do, I will shout against it and then when I do the same thing you will shout against it and block it. That is no format.
Rajdeep Sardesai: But what is the solution Sir given the gridlock in Parliament, given the fact that Parliament doesn't debate these issues, given the fact that a Bharat bandh is seen as a way to express people's anger, what's the way out of this adversarial politics?
Arun Shourie: Just do the work you can do without legislation at the moment. There is enormous scope for that. For instance, just expedite the execution of infrastructure projects. Don't squander money. There are a large number of companies in India who are stuck in real economic difficulties because the government has not discharged their bills. Pay them because they are working on infrastructure projects. How many committees have been announced in budget. Mr Chidambaram announced that this committee has been set up, the Prime Minister is its head to ensure expeditious implementation of core infrastructure projects, what has happened? Just get these clearances off the ground, just get infrastructure projects going. Even today, in one week, you can identify, which project, what is the obstacle and that is removed with 10 persons sitting at one table. That is the way forward. That is what will show that India can move ahead.
Rajdeep Sardesai: The reason I'm saying this Sir is that over the next 18 months, we're heading towards the General Election, it could come even earlier. There's talk that the government will come up with big ticket social sector schemes, be it free health for all, be it food security, do you believe that that is sustainable today given the fact that the fiscal deficit threatens to get out of control, or do you believe it is possible to do both in India?
Arun Shourie: I believe that that is the gravest danger in the next 18 months because we're going into that cycle, we're going to have elections in Gujarat, then Karnataka, then all the other states. This is one of the gravest dangers that this government, which is weak and has been paralysed thus far, will now go in for so called social sector expenditure, which is just throwing money outside the window. That will not improve delivery, that'll only mean higher deficit, higher inflation and crowding out the capacity for the private sector to borrow from the Indian saver. That'll be the repetition of the last five years.
Rajdeep Sardesai: May I ask you in conclusion then, you are trying to build the need for a bipartisan consensus at a time economic strain. Unfortunately, as we're seeing in politics that even after the Prime Minister's speech, exactly the opposite is happening. There are more shrill, adversarial voices. I come back one last time, the only way out you see, it seems, is that take executive decisions that re in the interest of the country. almost bypass Parliament, that you believe is the only way in Parliamentary democracy for good economics to be implemented?
Arun Shourie: And other things also. These things cannot be implemented, as you correctly implied, without everybody getting together. Can subsidies be reduced without everybody getting together? Everybody will agree in private that this level of subsidy is unsustainable. Similarly, look at reservations. As I have written in my books, there is a small cancer becoming bigger and bigger. Now reservation on the basis of religion, pay. I bet my name on it that before the next elections, this government, desperate for votes, will decrease something towards reservation in the private sector. Can you reverse this process without everybody realizing that everyone owes a duty to the country also.
Rajdeep Sardesai: Isn't that a message for our politicians. Mr Shourie, you've been in politics, are you worried, therefore, that politicians are populists, therefore economic populism doesn't make good economics, but politicians are not willing to understand the difference, because they have to get elected?
Arun Shourie: Many other, I don't want to keep quoting the example of Narendra Modi, but you'll regard him as a populist? He's delivering services. Why can't we learn from that example?
Rajdeep Sardesai: Why can't the BJP learn it from him then. He's a BJP chief minister.
Arun Shourie: That you may ask the BJP. I remember that Sardar Pratap Singh Kairon is not much of a populist, but he delivered. If I give you an example, Mr Bansilal delivered on the ground in Haryana, whatever other things he did. I remember many chief ministers in the south. look at Karnataka, how well it was administered.
Rajdeep Sardesai: My final word then, has the Prime Minister in you view delivered, or is it too little, too late?
Arun Shourie: He has begun, I hope he will persevere and run very rapidly, otherwise, even this little thing will be just another 'aatishbaazi' (firecracker) which went up and then nobody heard of it.
Rajdeep Sardesai: So you believe that the Prime Minister, if anything, the case is now for more reforms, not less reforms, often through executive decisions of the Cabinet, this is a moment where Manmohan Singh has to show that he's not just a one-off. He has to sustain this momentum.
Arun Shourie: Indeed.
Rajdeep Sardesai: Mr Arun Shourie, as always, a pleasure talking to you. Thank you very much for joining us.